SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13, OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission file No. 0-6028
BIRMINGHAM UTILITIES, INC.
(Exact Name of registrant as specified in its charter)
CONNECTICUT 06-0878647
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
230 Beaver Street, Ansonia, CT 06401
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number including area code (203) 735-1888
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
None None
Securities registered pursuant to Section 12(g) of the Act
Common Stock (no par value)
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates* of the
registrant based on the average bid and asked prices of such stock as of
February 28, 1997: $5,399,961.
Indicate the number of shares outstanding or each of the registrant's class
of common stock, as of the latest practicable date.
Class Outstanding at February 28, 1997
Common Stock, no par value 757,892
*For purposes of setting forth on the cover sheet of this Annual Report on
Form 10-K the aggregate market value of the voting stock held by non-
affiliates of the registrant, the registrant has deemed that all shares
beneficially held by officers, directors, and nominees are shares held by
affiliates.
PART I
Item 1. Business
The Company is a specially chartered Connecticut public
service corporation in the business of collecting and distributing
water for domestic, commercial and industrial uses and fire
protection in Ansonia and Derby, Connecticut, and in small parts of
the contiguous Town of Seymour. Under its charter, the Company
enjoys a monopoly franchise in the distribution of water in the
area which it serves. In conjunction with its right to sell water,
the Company has the power of eminent domain and the right to erect
and maintain certain facilities on and in public highways and
grounds, all subject to such consents and approvals of public
bodies and others as may be required by law.
The current sources of the Company's water are wells located
in Derby and Seymour and interconnections with the South Central
Connecticut Regional Water Authority's (the "Regional Water
Authority") system (a) at the border of Orange and Derby (the
"Grassy Hill Interconnection") and (b) near the border of Seymour
and Ansonia (the "Woodbridge Interconnection"). The Company
maintains its interconnected Peat Swamp, Middle and Quillinan
Reservoirs, a 2.2 million gallons per day (MGD) surface supply, for
emergency use only.
During 1996 approximately 1.19 billion gallons of water from
all sources were delivered to the Company's customers. The Company
has approximately 8,775 customers of whom approximately 98.7% are
residential and commercial. No single customer accounted for as
much as 10% of total billings in 1996. The business of the Company
is to some extent seasonal, since greater quantities of water are
delivered to customers in the hot summer months.
The Company had, as of March 3, 1997, 18 full-time employees.
The Company's employees are not affiliated with any union
organization.
The Company is subject to the jurisdiction of the Connecticut
Department of Public Utility Control ("DPUC") as to accounting,
financing, ratemaking, disposal of property, the issuance of long
term securities and other matters affecting its operations. The
Connecticut Department of Public Health and Addiction Services (the
"Health Department" or "DPHAS") has regulatory powers over the
Company under state law with respect to water quality, sources of
supply, and the use of watershed land. The Connecticut Department
of Environmental Protection ("DEP") is authorized to regulate the
Company's operations with regard to water pollution abatement,
diversion of water from streams and rivers, safety of dams and the
location, construction and alteration of certain water facilities.
The Company's activities are also subject to regulation with regard
to environmental and other operational matters by federal, state
and local authorities, including, without limitation, zoning
authorities.
The Company is subject to regulation of its water quality
under the Federal Safe Drinking Water Act ("SDWA"). The United
States Environmental Protection Agency has granted to the Health
Department the primary enforcement responsibility in Connecticut
under the SDWA. The Health Department has established regulations
containing maximum limits on contaminants which have or may have an
adverse effect on health.
Executive Officers of the Registrant
Business Experience
Name, Age and Position Past 5 Years
Betsy Henley-Cohn, 44,
Chairwoman of the Board Chairwoman of the Board of Directors
of the Company since May of 1992;
Chairman of the Board of Directors
and Treasurer, Joseph Cohn & Sons,
Inc, (painting contractors);
Director, United Illuminating
Company; Aristotle Corp.; Society
for Savings Bancorp., Director 1985
- 1993.
Aldore J. Rivers, 63, President of the Company since 1985.
President
Item 2. Properties
The Company's properties consist chiefly of land, wells,
reservoirs, and pipelines. The Company has 4 production wells with
an aggregate effective capacity of approximately 3.0 MGD. The
Company's existing interconnections with the Regional Water
Authority can provide 3.8 MGD. The Company's entire system has a
safe daily yield (including only those supplies that comply with
the SDWA on a consistent basis) of approximately 6.8 MGD, while the
average daily demand and the maximum daily demand on the system
during 1996 were approximately 3.25 MGD and 3.99 MGD, respectively.
The distribution system, with the exception of the well supplies,
is mainly through gravity, but there are seven distinct areas at
higher elevations where pumping, pressure tanks and standpipes are
utilized. These higher areas serve approximately 25% of the
Company's customers.
The Company has three emergency stand-by reservoirs (Peat
Swamp, Quillinan and Middle) with a storage capacity of 484 million
gallons and a safe daily yield of approximately 2.2 MGD. Because
the water produced by those reservoirs does not consistently meet
the quality standards of the SDWA, none of those reservoirs is
actively being used by the Company to supply water to the system.
In addition, the Company owns the Great Hill reservoir system and
the portion of the Sentinel Hill Reservoirs located in Derby which
were abandoned as usable reservoirs in 1994 and 1988 respectively,
with the approval of the Health Department. Because these
reservoirs do not meet the requirements of the SDWA and because of
their minimal storage capacity, the Company has determined that
they are not large enough to build filtration plants to bring the
water into compliance economically. During 1996, the Company sold
to the City of Ansonia a portion of the Sentinel Hill Reservoir
system and its watershed located in Ansonia.
The Company's dams are subject to inspection by and the
approval of the DEP. All of the Company's dams are in compliance
with improvements previously ordered by the U.S. Army Corps. of
Engineers.
The Company has an office building at 230 Beaver Street, in
Ansonia. That building was built in 1964, is of brick
construction, and contains 4,200 square feet of office and storage
space. In addition, the Company owns two buildings devoted to
equipment storage. The Company also maintains some office space in
a wood frame, residential building owned by the Company at 228
Beaver Street, Ansonia.
The Company's approximately 3,400 acres of land were acquired
over the years principally in watershed areas to protect the
quality and purity of the Company's water at a time when land use
was not regulated and standards for water quality in streams were
non-existent.
Under Connecticut law a water company cannot abandon a source
of supply or dispose of any land holdings associated with a source
of supply until it has a "water supply plan" approved by the Health
Department. The Health Department approved the Company's first
Water Supply Plan in 1988 and an updated Water Supply Plan in 1993.
Pursuant to abandonment permits issued by the Health Department in
1988, the Company abandoned its Upper and Lower Sentinel Hill
Reservoirs, Steep Hill (Bungay) Reservoir, and Fountain Lake
Reservoir, and the land associated with them then became available
for sale. In 1994, the abandonment of Great Hill Reservoir was
approved by the Health Department.
Since 1988, the Company has sold approximately 150 acres of
land in Bethany for a gain after taxes of $765,367, 96 acres in
Ansonia, Derby and Seymour for a net gain of $974,567, 151 acres in
Seymour for a net gain of $796,527 and 59 acres in Ansonia for a
net gain of $529,739.
The Company believes that approximately 1,400 acres of its
land holdings will not be needed in the future for water supply
purposes and can be sold. The Company has proposed, and the DPUC
has accepted with respect to prior transactions, an accounting and
ratemaking mechanism by which the gain on the sale of the Company's
land holdings is shared between ratepayers and stockholders as
contemplated by Connecticut law. (See Note 1 to the Company's
Financial Statements).
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for the Registrant's Common Stock and Related
Security Holding Matters
As of February 28, 1997 there were approximately 496 record
holders of the Company's common stock. Approximately 37% of the
Company's stock is held in "nominee" or "street" name. The
Company's common stock is traded on the NASDAQ Small-Cap Market.
The market is not active, and actual trades are infrequent. The
following table sets forth the dividend record for the Company's
common stock and the range of bid prices for the last two calendar
years. The stock prices are based upon NASDAQ records provided to
the Company. The prices given are retail prices. The Company's
Mortgage Bond Indenture under which its First Mortgage Bonds are
issued contains provisions that limit the dividends the Company may
pay, under certain circumstances.
<TABLE>
<CAPTION>
Bid
High Low Dividend Paid
<S> <C> <C> <C>
1995 First Quarter 10.50 10.50 $0.12
Second Quarter 10.50 10.00 $0.12
Third Quarter 10.50 10.50 $0.12
Fourth Quarter 10.50 10.00 $0.12
1996 First Quarter 11.00 10.00 $0.12
Second Quarter 11.00 9.50 $0.125
Third Quarter 10.00 8.50 $0.13
Fourth Quarter 10.00 10.00 $0.13
1997 Through February 28 10.50 10.50 -
</TABLE>
Item 6. Selected Financial Data
Presented below is a summary of selected financial data for the years 1992
through 1996:
<TABLE>
<CAPTION>
(000's omitted except for per share data)
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Operating Revenues $4,380 $4,238 $4,124 $4,033 $3,847
Income before
Interest Charges 968 863 913 910 810
Income from Land
Dispositions* 387 279 - - 39
Net Income 765 518 363 378 342
Earnings Per Share** 1.02 .69 .48 .50 .46
Cash Dividends Declared
(per share)** .50 .48 .48 .46 .44
Total Assets 15,568 14,624 15,246 14,602 13,944
Long Term Debt 5,981 6,001 6,329 5,815 5,511
Short Term Debt 294 75 165 - -
Shareholder Equity 3,841 3,408 3,220 3,217 3,195
</TABLE>
* See Management Discussion and Analysis, Results of Operations - Land
Dispositions
** Per share amounts for 1992 have been restated for comparability to
reflect the impact of the July 16, 1993 two for one stock split.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Net Income
Net income increased from $362,520 in 1994 to $518,065 in 1995
and $764,737 in 1996.
The $155,545 increase in net income from 1994 to 1995
reflected both a gain on a sale of land, recognized in 1995, of
$279,101 and an increase of $34,970 in other income, resulting
primarily from fees from a management contract. These increases
were partially offset by increased operating expenses of $84,940
and a $73,586 increase in interest expense in 1995.
Operating revenues in 1996 increased $141,696, and interest
expense declined by $33,959, compared to 1995. Other income,
however, decreased by $71,335 which resulted in an increase of
$99,896 in net income before land sales.
Current land sale gains of $386,709 in 1996, along with
$161,065 in amortization of prior years gains produced total gains
of $547,774 as compared with $400,998 in 1995. The increase of
$146,776, when combined with the increase from operations of
$99,896, resulted in the overall increase in 1996 net income of
$246,672 over 1995 net income.
Revenues
The Company's business is to provide water service to
customers, primarily in the cities of Ansonia and Derby,
Connecticut. In 1996, revenues from sales of water increased by
$141,696 (3.34%) over 1995 revenues. The Company was granted a
6.89% increase in rates by the Connecticut DPUC effective January
1, 1996. Due to a sharp decline (5.77%) in water consumed by the
Company's customers during the year, the Company did not enjoy the
full impact of the increase granted. The decline in consumption is
attributable, for the most part, to the wet summer of 1996, when
consumption declined (13.80%) from the summer drought conditions of
1995. Consumption of water by commercial and industrial customers
continued to decrease both from 1994 to 1995 and from 1995 to 1996,
due to continuing poor economic conditions in the Company's service
area, which has resulted in the loss of several commercial and
industrial customers.
In 1995, revenues increased $113,688 (2.8%) over 1994
revenues, primarily as a result of the full impact in 1995 of a
July 20, 1994 2.75% annual rate increase granted by the Connecticut
DPUC and the increased use of water during the 1995 summer drought
conditions. Because of favorable supply situations, the Company
did not need to impose use restrictions despite the drought.
While residential water consumption and total water
consumption were higher in 1995 than in 1994, commercial and
industrial customers' consumption dropped from 1994 to 1995 for the
same reasons as noted previously.
Operating Deductions
Operating deductions in 1996 increased by only $4,424 (.0012%)
when compared to 1995.
Operating expenses declined by $109,136 in 1996 from the 1995
level, due mainly to a decrease in purchased water of $63,779
resulting from the weather differences previously noted. The other
major expense reduction from 1995 to 1996 was $33,307 in special
services caused mainly by decreased auditing fees.
Maintenance expenses increased in 1996 by $70,133 over 1995,
caused primarily by the harsh winter of 1996 which created the
necessity for several major repairs. The increase of $12,207 in
depreciation expense from 1995 to 1996 reflects the additions to
plant of $2,885,872 over the past three years.
Taxes other than income taxes decreased by $29,497, due to a
decrease in property taxes caused by a sale of land and a decrease
in the mill rate by one Town in the Company's service area, while
the gross receipts tax increased due to the increase in revenues
discussed previously.
Operating deductions in 1995 increased $194,497 (5.6%) when
compared to 1994. The cost of purchased water increased $53,904,
due to the Company's increased reliance on purchased water during
drought conditions experienced in 1995's summer months. The cost
of maintaining distribution mains increased $26,064 primarily the
result of fixing two significant main breaks in 1995. Customer
account expense increased $31,368 as the result of a concerted
collection effort which significantly reduced delinquent accounts
during 1995. The remaining increase reflects the $28,990 increase
in depreciation expense associated with the cost of capital
expenditures of $671,390 in 1995 and $696,340 in 1994, the annual
increase in salaries and the general level of inflation affecting
many accounts, including the $18,875 increase in taxes other than
income. The decline in taxes on income partially offset the impact
of the increases noted above.
Interest
Interest expense, which increased from $550,155 in 1994 to
$623,741 in 1995, decreased in 1996 to $589,782, reflecting a sale
of land in late September 1995 the proceeds of which were used to
reduce debt incurred to fund the construction of improvements to
utility plant, and the capitalization of $20,262 in interest costs.
Income Taxes
Taxes on the Company's income from operations were $128,459,
in 1996, $67,742 in 1995 and $95,884 in 1994. The decrease in 1995
from 1994 reflects the reduction in operating income in that year,
while the increase in 1996 from 1995 reflects the increase in
operating income for that year.
The Company also incurs income tax liability for gains from
land transactions, both in the year in which they occur and in the
later years in which income, previously deferred in accordance with
the DPUC's orders concerning the sharing of the gains between the
Company's shareholders and ratepayers, is recognized by the
Company. Taxes related to gains on land transactions were
$382,107, $286,694 and $90,977 in 1996, 1995 and 1994,
respectively. The Company's total income tax liability including
both the tax on operating income and on land sale gains was
$510,566 in 1996, $354,436 in 1995 and $186,861 in 1994.
Land Dispositions
When the Company disposes of land, any gain, net of tax,
recognized is shared between rate payers and stockholders based
upon a formula approved by the DPUC. The impact of land
dispositions is recognized in two places on the statement of
income.
The 1996 statement of income reflects income from a
disposition of land (net of taxes) of $386,709 and the 1995
statement of income reflects income from dispositions of land (net
of taxes) of $279,101 which, in both cases, represent the
stockholders' immediate share of income from land dispositions
occurring in each year. In 1994, there were no dispositions of
land.
The second place where land disposition income is recognized
in the financial statements is as a component of operating income
on the line entitled "Amortization of Deferred Income on
Dispositions of Land." These amounts represent the recognition of
income deferred on land dispositions which occurred in prior years.
The amortization of deferred income on land dispositions, net of
tax was $161,065, $121,897 and $126,028 for the years 1996, 1995
and 1994, respectively.
Recognition of deferred income will continue over time
periods ranging from four to fifteen years depending upon the
amortization period ordered by the DPUC for each particular
disposition. See Note 7 of the Financial Statements.
Effects of Inflation
The Company received a rate order from the DPUC allowing an
increase in the Company's rates designed to produce increases in
the Company's annual revenues of $113,287 (effective July 20,
1994).
The Company sought approval for additional rate relief on
July 3, 1995. As a result of that application, the DPUC approved
a 6.9% increase in rates effective January 1, 1996 designed to
produce an annual increase in revenues of approximately $289,333.
The Company is currently reviewing the need to seek an
additional rate increase in 1997 to become effective on or about
January 1, 1998.
FINANCIAL RESOURCES
During 1996, 1995 and 1994, the Company's water operations
generated funds available for investment in utility plant and for
use in financing activities, including payment of dividends on
common stock, of $348,773, $471,196 and $333,579, respectively (see
Statement of Cash Flows).
Net cash provided by operating activities decreased $122,423
from 1995 to 1996. The major factors causing the decrease were an
increase in deferred charges and other assets of $80,425 related
mostly to the promotion of land sales and a lesser contribution
arising from changes in accounts receivable and accrued revenues
and accounts payable and accrued liabilities.
During the three-year period 1994, 1995 and 1996, the Company
has generated sufficient funds to meet its day-to-day operational
needs, including regular expenses, payment of dividends, and
investment in normal plant replacements, such as new services,
meters and hydrants. It expects to be able to continue to do so
for the forseeable future. In order to meet day-to-day cash needs
that may arise unexpectedly, the Company maintains an unsecured
working capital line of credit of up to $600,000 with a local bank.
There were borrowings outstanding of $125,000 under the working
capital line of credit as of December 31, 1996 at an interest rate
of 8.375% and at present an interest rate of 7.125%.
Completion of the Company's Long Term Capital Improvement
Program is dependent upon the Company's ability to raise capital
from external sources, including, for the purpose of this analysis,
proceeds from the sale of the Company's holdings of excess land.
During 1996, 1995, and 1994, the Company's additions to utility
plant, net of customer advances, cost $1,461,152, $600,278, and
$619,773, respectively (see Statement of Cash Flows). These
additions were financed primarily from external sources, including
proceeds from land sales and increases in debt.
The Company has outstanding $4,700,000 principal amount of
Mortgage Bonds, due September 1, 2011, issued under its Mortgage
Indenture. The Mortgage Indenture limits the issuing of additional
First Mortgage Bonds and the payment of dividends. It does not,
however, restrict the issuance of either long term or short term
debt which is either unsecured or secured with liens subject to the
lien of the Mortgage Indenture. The Company also has a secured,
term loan with a principal amount outstanding on December 31, 1996
of $1,300,000, at an interest rate of 8.18%. The term loan
provides for annual sinking fund payments and must be paid in full
in 2004.
The Company also maintains an additional, secured, two-year
line of credit in the principal amount of $1,500,000 maturing on
May 1, 1998. The secured line of credit is being used to provide
funds to continue the Company's construction program; at the
Company's option it may be converted to a term loan at the end of
the two year revolving period, with the term loan maturing in 2004.
(See Note 6 to the Financial Statements). In April 1996 when the
revolving loan financing arrangement was approved by the DPUC, the
DPUC prohibited the Company from drawing down funds under the
revolving line of credit if, at the time of or as a result of the
draw down, the amount of the Company's long-term debt (including
amounts outstanding under the two year revolving line of credit)
would exceed 67% of the Company's total capitalization. The effect
of the limitation,as of December 31, 1996, is to limit the Company
to advances outstanding under the line of credit in the aggregate
amount of approximately $750,000 for use on budgeted projects until
such time as the Company obtains additional equity capital. There
was a balance of $150,000 outstanding under the two year revolving
line of credit at December 31, 1996 at an interest rate of 8.375%
and at present an interest rate of 7.125%.
The Company's 1997 Capital Budget of $1,430,000 is two-tiered.
The first tier consists of typical capital improvements made each
year for services, hydrants and meters budgeted for $230,000 in
1997 and is expected to be financed primarily with internally
generated funds.
The second tier of the 1997 Capital Budget consists of
replacements and betterments which are part of the Company's Long
Term Capital Improvement Program and includes $1,200,000 of
budgeted plant additions. Plant additions from this part of the
1997 budget will require external financing in addition to the
Company's line of credit. Second tier plant additions can be, and
portions of it are expected to be, deferred to future years if
funds are not available for their construction in 1997.
As of December 31, 1996, the Company has approximately 1,400
acres of excess land available for sale, consisting of land
currently classified as Class III, non-watershed land under the
statutory classification system for water company lands. The
Company believes that by selling these excess lands it can generate
sufficient equity capital to support its 10 year capital budget,
currently estimated at $11,824,000. Such land dispositions are
subject to approval by the DPUC.
During 1996, the Company entered into an agreement with the
Connecticut Department of Transportation ("DOT") to sell to DOT a
3.6 acre parcel of land in Seymour for $175,000. The Company has
applied to the DPUC for permission to sell the parcel, and the
application is pending. The Company knows of no reason why the
DPUC should not approve the sale. The DPUC has issued a schedule
pursuant to which it expects to render a decision in May. Assuming
a favorable decision, the Company hopes to be able to close the
transaction shortly thereafter.
On March 18, 1997, the Company entered into a Purchase and
Sale Agreement with M/1 Homes, LLC ("M/1 Homes"), pursuant to which
the Company agreed to sell and M/1 Homes agreed to purchase
approximately 245 acres of the Company's unimproved real property
in Seymour, Connecticut for $3,950,000. The purchase and sale are
subject to the DPUC's approval. While the Company cannot predict
whether it will be able to obtain the approval of the DPUC, it
again knows of no reason why the DPUC should not approve the sale.
Connecticut law requires that the DPUC render a decision on such an
application within 150 days from its filing. The agreement between
the Company and M/1 Homes may be terminated by the Company if it
has not received the required approval by November 14, 1997. the
obligation of M/1 Homes to purchase the property is conditioned
upon its receipt of local, state and federal approvals of its
proposed development of the site as an 18 hole golf course, along
with not fewer than 180 detached residential units for adults 55
years old and older, a clubhouse and catering facilities. The
agreement may be terminated by either party if M/1 Homes had not
received all the required development approvals by December 31,
1998. There is a provision in the agreement to extend its term
through December 31, 2000 to accommodate appeals of required
governmental approvals, in which case the purchase price for the
property will increase by $20,000 for each month, or portion
thereof, after December 31, 1999 until the closing shall occur.
The Company cannot predict whether M/1 Homes will be able to obtain
all of the required approvals.
Finally, late last year the Company reached a tentative, non-
binding agreement to sell all of the approximately 145 acres of the
portion of its Sentinel Hill property located in Derby, Connecticut
to the City of Derby for $1,800,000. The City expects to use the
property primarily for open space purposes and, on March 19, 1997,
obtained overwhelming voter approval to issue bonds to fund the
purchase price. Since the voter approval, the Company and the City
have been negotiating the terms of a definitive, binding agreement
for the sale. If formal agreement between the parties is reached
shortly as the Company expects, the Company will submit the
agreement to the DPUC for approval approximately 40 days after
reaching such agreement. The Company knows of no reason why the
DPUC should not approve the sale.
In 1994 the Company's Board of Directors approved a common
stock Dividend Reinvestment Plan (the "Plan") pursuant to which
shareholders will be entitled to purchase up to 70,000 new shares
of the Company's Common Stock by applying to the purchase price of
the new shares cash dividends which otherwise would be issued by
the Company with respect to its existing common stock. The
Dividend Reinvestment Plan provides that the purchase price for the
new shares will be their fair market value at the time of the
purchase. All regulatory approvals for the Plan were obtained
during the first six months of 1995 and the Plan was in place for
the quarterly dividends paid on June 30, 1995 and each quarterly
dividend payment thereafter. Dividends reinvested during 1995
totalled $31,108 and in 1996 $51,386.
Item 8. Financial Statements and Supplementary Data
Index To Financial Statements Page
Reports of Independent Accountants 13 & 14
Balance Sheet as of December 31, 1996 and
December 31, 1995 15 & 16
Statement of Income and Retained Earnings for
the three years ended December 31, 1996 17
Statement of Cash Flows for
the three years ended December 31, 1996 18
Notes to Financial Statements 19 - 33
Financial Statement Schedule:
Schedule IX - Short Term Borrowings 34
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or
the notes thereto.
Report of Independent Accountants
February 24, 1995
To the Board of Directors and Shareholders of
Birmingham Utilities, Inc.
In our opinion, the accompanying statements of income and retained
earnings and of cash flows present fairly, in all material
respects, the results of operations and cash flows of Birmingham
Utilities, Inc. for the year ended December 31, 1994, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
We have not audited the financial statements of Birmingham
Utilities, Inc. for any period subsequent to December 31, 1994.
/s/ Price Waterhouse LLP
Independent Auditors' Report
To the Shareholders
Birmingham Utilities, Inc.
Ansonia, Connecticut
We have audited the accompanying balance sheets of Birmingham
Utilities, Inc. as of December 31, 1996 and 1995, and the related
statements of income and retained earnings and cash flows for the
years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the 1996 and 1995 financial statements referred to
above present fairly, in all material respects, the financial
position of Birmingham Utilities, Inc. as of December 31, 1996 and
1995 and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting
principles.
February 14, 1997
Bridgeport, Connecticut
<TABLE>
<CAPTION>
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
December 31, 1996 and 1995
Assets
1996 1995
<S> <C> <C>
Utility plant $17,766,937 $16,352,307
Accumulated depreciation (5,472,071) (5,130,305)
12,294,866 11,222,002
Current assets:
Cash and cash equivalents 185,479 398,869
Accounts receivable, net of allowance
for doubtful accounts of $75,000 681,194 725,154
Accrued utility and other revenue 411,542 412,876
Materials and supplies 51,792 50,840
Prepayments 34,586 27,160
Total current assets 1,364,593 1,614,899
Deferred charges 870,736 713,417
Unamortized debt expense 193,466 205,429
Income taxes recoverable 422,844 456,659
Other assets 421,844 411,352
1,908,961 1,786,857
$15,568,420 $14,623,758
</TABLE>
<TABLE>
<CAPTION>
Shareholders' Equity and Liabilities
1996 1995
<S>
Shareholders' equity:
Common stock, no par value; authorized
2,000,000 shares; issued and outstanding <C> <C>
(1996, 757,892 shares; $2,221,786 $2,172,116
Retained earnings 1,619,188 1,235,116
3,840,974 3,407,598
Notes payable 1,375,000 1,300,000
Long term debt 4,606,000 4,700,564
5,981,000 6,000,564
Current liabilities:
Note payable 125,000
Current portion of note payable
and long-term debt 169,000 75,000
Accounts payable and accrued liabilitie 747,323 674,488
Total current liabilities 1,041,323 749,488
Customers' advances for construction 1,291,114 1,229,985
Contributions in aid of construction 719,736 719,736
Regulatory liability - income taxes refundable 187,477 195,049
Deferred income taxes 1,484,972 1,263,932
Deferred income on dispositions of land 1,021,824 1,057,406
Commitments and contingent liabilities
(Note 13)
15,568,420 $14,623,758
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S>
Operating revenues: <C> <C> <C>
Residential and commercial $3,325,758 $3,214,442 $3,089,759
Industrial 169,070 164,192 152,402
Fire protection 628,558 615,563 608,954
Public authorities 74,320 83,212 97,933
Other 182,065 160,666 175,339
4,379,771 4,238,075 4,124,387
Operating deductions:
Operating expenses 2,394,730 2,503,866 2,370,823
Maintenance expenses 225,062 154,929 113,198
Depreciation 395,059 382,852 353,862
Taxes, other than income taxes 509,799 539,296 520,421
Taxes on income 128,459 67,742 95,884
3,653,109 3,648,685 3,454,188
726,662 589,390 670,199
Amortization of deferred income on
dispositions of land (net of income taxes
of $115,977 in 1996, $90,091 in 1995 and
$90,977 in 1994) 161,065 121,897 126,028
Operating income 887,727 711,287 796,227
Other income, net 80,083 151,418 116,448
Income before interest expense 967,810 862,705 912,675
Interest expense 589,782 623,741 550,155
Income from dispositions of land (net of
income taxes of $266,130 in 1996 and
$196,603 in 1995) 386,709 279,101 -
Net income 764,737 518,065 362,520
Retained earnings, beginning of year 1,235,482 1,077,185 1,074,266
Dividends 381,031 359,768 359,601
Retained earnings, end of year $1,619,188 $1,235,482 $1,077,185
Earnings per share $1.02 $.69 $.48
Dividends per share $.50 $.48 $.48
Shares outstanding 757,892 752,282 749,168
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S>
Cash flows from operating activities: <C> <C> <C>
Net income $ 764,737 $ 518,065 $ 362,520
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from land dispositions (386,709) (279,101) -
Depreciation and amortization 453,116 460,108 429,425
Amortization of deferred income (161,065) (121,897) (126,028)
Deferred income taxes (302,617) (256,489) 29,935
Allowance for funds used during
construction (20,262) - (21,515)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable and accrued revenues 45,294 85,008 (103,588)
(Increase) decrease in materials
and supplies (952) (5,391) 4,442
Increase in prepayments (7,426) (421) (551)
Increase (decrease) in accounts
payable and accrued liabilities 72,835 99,067 (14,398)
Increase in deferred charges and
other assets (108,178) (27,753) (226,663)
Net cash provided by operating activities 348,773 471,196 333,579
Cash flows from investing activities:
Capital expenditures (1,518,142) (671,390) (696,340)
Sale of utility plant - 2,248 3,187
Proceeds from land disposition 1,041,350 - -
Note receivable - 1,213,222 -
Customer advances 56,990 71,112 76,567
Customer advances for construction (9,180) (2,107) (6,074)
Net cash provided by (used in) investing
activities (428,982) 613,085 (622,660)
Cash flows from financing activities:
Issuance of long-term debt - - 1,500,000
Net borrowing under revolving line
of credit 275,000 - 340,000
Repayment of long-term debt (75,564) (75,564) (50,939)
Repayment of revolving line of credit - (340,000) (1,110,000)
Debt issuance cost (2,972) - (38,267)
Dividends paid, net (329,645) (328,660) (359,601)
Net cash provided by (used in) financing
activities (133,181) (744,224) 281,193
Net increase (decrease) in cash (213,390) 340,057 (7,888)
Cash and cash equivalents, beginning of year 398,869 58,812 66,700
Cash and cash equivalents, ending of year $185,479 $398,869 $58,812
</TABLE>
See notes to financial statements.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies:
Description of business:
Birmingham Utilities, Inc.'s (the "Company") predominant business
activity is to provide water service to various cities and towns in
Connecticut. The Company's accounting policies conform to generally
accepted accounting principles, and the Uniform System of Accounts and
ratemaking practices prescribed by the Connecticut Department of Public
Utility Control ("DPUC").
Estimates and assumptions:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported revenues and
expenses during the reporting period. Actual results could vary from
those estimates.
Utility plant:
The costs of additions to utility plant and the costs of renewals and
betterments are capitalized. The cost of repairs and maintenance is
charged to income. Upon retirement of depreciable utility plant in
service, accumulated depreciation is charged with the book cost of the
property retired and the cost of removal, and is credited with the
salvage value and any other amounts recovered.
Depreciation:
For financial statement purposes, the Company provides for depreciation
using the straight-line method. The rates used are intended to
distribute the cost of depreciable properties over their estimated
service lives. For income tax purposes, the Company provides for
depreciation utilizing the straight-line and accelerated methods.
Cash and cash equivalents:
Cash and cash equivalents consist of cash in banks and overnight
investment accounts in banks.
From time to time, the Company has on deposit at financial institutions
cash balances which exceed federal deposit insurance limitations. The
Company has not experienced any losses in such accounts and believes it
is not exposed to any significant credit risk on cash and cash equivalents.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies (continued):
Allowance for funds used during construction:
An allowance for funds used during construction ("AFUDC") is made by
applying the last allowed rate of return on rate base granted by the DPUC
to construction projects exceeding $10,000 and requiring more than one
month to complete. AFUDC represents the net cost, for the period of
construction, of borrowed funds used for construction purposes and a
reasonable rate on other funds used. AFUDC represents a noncash credit
to income. Utility plant under construction is not recognized as part of
the Company's rate base for ratemaking purposes until facilities are
placed into service. Accordingly, the Company capitalizes AFUDC as a
portion of the construction cost of utility plant until it is completed.
Capitalized AFUDC is recovered through water service rates over the
service lives of the facilities.
Revenue recognition:
The Company follows the practice of recognizing revenue when bills are
rendered to customers. In addition, the Company accrues revenue for the
estimated amount of water sold but not billed as of the balance sheet
date.
Advances for construction/contributions in aid of construction:
The Company receives cash advances from developers and customers to
finance construction of new water main extensions. A portion of these
advances are refunded to developers and customers as revenues are earned
on the new water mains. Any unrefunded balances are reclassified to
"Contributions in aid of Construction" and are no longer refundable.
Fair value of financial instruments:
The carrying amount of cash and cash equivalents, trade accounts receivable,
and trade accounts payable approximate their fair values due to their
short-term nature. The carrying amount of note payable and long-term debt
approximates fair value based on market conditions for debt of similar
terms and maturities.
Income taxes:
Except for accelerated depreciation since 1981 (federal only) and the tax
effect of post-1986 contributions in aid of construction, for which deferred
income taxes have been provided, the Company's policy is to reflect as
income tax expense the amount of tax currently payable. This method, known
as the flow-through method of accounting, is consistent with the ratemaking
policies of the DPUC, and is based on the expectation that tax expense
payments in future years will be allowed for ratemaking purposes.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies (continued):
Income taxes (continued):
The Company's deferred tax provision was determined under the liability
method. Deferred tax assets and liabilities were recognized based on
differences between the book and tax bases of assets and liabilities using
presently enacted tax rates. The provision for income taxes is the sum of
the amount of income tax paid or payable as determined by applying the
provisions of enacted tax laws to the taxable income for that year and the
net change during the year in the Company's deferred tax assets and
liabilities.
In addition, the Company is required to record an additional deferred
liability for temporary differences not previously recognized. This
additional deferred tax liability totaled $235,438 at December 31, 1996
and $261,610 at December 31, 1995. Management believes that these
deferred taxes will be recovered through the ratemaking process.
Accordingly, the Company has recorded an offsetting regulatory asset and
regulatory liability.
Employee benefits:
The Company has a noncontributory defined benefit plan which covers
substantially all employees. The benefits are primarily based on years of
service and the employee's compensation. Pension expense includes the
amortization of a net transition obligation over a twenty-three year
period. The Company's funding policy is to make annual contributions in an
amount that approximates what was allowed for ratemaking purposes
consistent with ERISA funding requirements. Contributions are intended
to provide not only for benefits attributed to service to date, but also
for those expected to be earned in the future.
The Company has a 401(k) Plan. Employees are allowed to contribute a
percentage of salary, based on certain parameters. From January 1, 1994
through March 31, 1996 the Company matched 25% of employee contributions
up to 6% of total compensation. Effective April 1, 1996, the Company
matches 50% of employee contributions up to 6% of total compensation.
In addition, the Company provides certain health care and life insurance
benefits for retired employees and their spouses. Generally, the plan
provides for Medicare wrap-around coverage plus life insurance based on a
percentage of each participant's final salary. Substantially all of the
Company's employees may become eligible for these benefits if they reach
retirement age while working for the Company. The Company's obligation
for postretirement benefits expected to be provided to or for an employee
must be fully accrued by the date that the employee attains full
eligibility for all benefits. The Company has elected to recognize the
unfunded accumulated postretirement benefit obligation over 20 years.
The Company's funding policy is to contribute amounts annually to a
benefit trust and pay directly all current retiree premiums.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies (continued):
Compensated absences:
Company policy and practice does not provide for any accumulated but
unused vacation, sick time or any other compensated absences to be carried
over beyond the year end.
Deferred charges relating to land dispositions:
Deferred charges are allocated to dispositions of land based on specific
identification, if applicable, and on the percentage of acres disposed to
total surplus acres.
Land dispositions:
The Company is actively seeking to dispose of surplus land not required
for utility operations. The net gain of each disposition, after deducting
costs, expenses and taxes is allocated between the shareholders and
ratepayers by a method approved by the DPUC based on legislation passed by
the Connecticut General Assembly. The portion of income applicable to
shareholders is recognized in the year of disposition. Income attributable
to ratepayers is deferred and amortized in a manner that reflects
reduced water revenue arising from the sharing formula as determined by
the DPUC.
Unamortized debt expense:
Costs related to the issuance of debt are capitalized and amortized over
the term of the related indebtedness. The Company has received permission
from the DPUC to amortize the costs associated with debt previously
outstanding over the term of the new indebtedness.
<TABLE>
<CAPTION>
2. Utility plant:
1996 1995
<S> <C> <C>
Pumping, treatment and distribution $13,368,635 $12,260,402
Source of supply $ 3,126,167 $ 2,879,303
General plant 1,132,329 1,010,268
Organization 30,219 30,219
17,657,350 16,180,192
Construction in process 109,587 172,115
</TABLE>
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
3. Accounts payable and accrued liabilities:
1996 1995
<S> <C> <C>
Accounts payable $239,886 $116,313
Accrued liabilities:
Interest 151,027 151,172
Taxes 173,777 297,810
Pension 147,250 72,710
Other 35,383 36,483
747,323 674,488
</TABLE>
<TABLE>
<CAPTION>
4. Taxes, other than income taxes:
1996 1995 1994
<S> <C> <C> <C>
Municipal $225,320 $267,183 $261,685
Gross receipts 215,300 208,201 198,548
Payroll 69,179 63,912 60,188
$509,799 $539,296 $520,421
</TABLE>
<TABLE>
<CAPTION>
5. Long term debt:
1996 1995
<S>
First mortgage bonds, Series E, 9.64%, <C> <C>
due September 1, 2011 $4,700,000 $4,700,000
Other - 564
$4,700,000 $4,700,564
</TABLE>
Pursuant to its Mortgage Bond Indenture, the Company has outstanding, a
series of first mortgage bonds in the amount of $4,700,000 due on September 1,
2011. The terms of the indenture provide, among other things, annual sinking
fund requirements commencing September 1, 1997, and limitations on (a) payment
of cash dividends; and (b) incurrence of additional bonded indebtedness.
Under the dividend limitation, approximately $696,000 was available to pay
dividends at December 31, 1996 after the quarterly dividend payment made on
that date. Interest is payable semi-annually on the first day of March and
September. The indenture is secured by a lien on all of the Company's utility
property other than excess land available for sale.
There are no maturities of long term debt until September 1, 1997, when the
Company is required to pay $94,000 and on each September 1 thereafter, until
the bonds are paid in full.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
6. Note payable:
In a previous year, the Company converted certain short term borrowings to a
ten year $1,500,000 term loan, established a $1,500,000 revolving line of
credit to fund additional capital improvements, and obtained an unsecured line
of credit of $600,000 to be used for working capital purposes. The revolving
line of credit and unsecured line of credit become due and payable May 1, 1998
and May 1, 1997, respectively, with the unsecured portion required to be
reduced to a zero balance for 30 consecutive days prior to the maturity date.
The outstanding balance of the revolving note may be converted to a term loan
at maturity with the same maturity and payment terms as the original term loan.
Both the term loan and the revolving line of credit are secured by a lien
(subordinate to the lien of the Mortgage Bond Indenture - See Note 5) on all
of the Company's utility property other than its excess land available for
sale. The term loan portion of the facility has both fixed and variable
interest rate options. The applicable interest rate at December 31, 1996 and
through July 2000 is 8.18%. Interest is payable monthly. The revolving line
of credit also has various interest rate options, including a variable rate
at 0.125% above the prime rate and LIBOR rate options, fixed for various short
term periods including 30, or 90 days at 1.75% over the applicable LIBOR rate.
Interest is payable monthly. Borrowings of $150,000 were outstanding on the
revolving line of credit at December 31, 1996.
The unsecured line of credit also provides for various interest rate options,
including a variable rate at 0.125% above the prime rate, a variable rate at
1.75% above the bank's cost of funds (as provided by the bank), and the LIBOR
options also available under the revolving line of credit. Borrowings of
$125,000 were outstanding on the unsecured line of credit at December 31,
1996. All three facilities provide that a default under any of them or under
the Mortgage Bond Indenture is considered a default under the others. They
also provide that the net proceeds from the sale of any of the Company's
excess land must be used to reduce the balance of the revolving line of credit
first and then the term loan and require maintenance of certain financial
ratios and shareholders' equity of at least $3,000,000. In addition, the DPUC
has restricted the Company from borrowing funds under the revolving line of
credit if at any time or as a result of the borrowing, the Company's long-term
debt (including amounts outstanding under the revolving line of credit) would
exceed 67% of the Company's total capitalization. The DPUC has also required
the Company's ratio of long-term debt to total capital not exceed 62% by May
1, 1998.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
6. Notes payable (continued):
<TABLE>
<CAPTION>
Minimum annual principal payments due on the term loan follows:
Year ending December 31:
<S> <C>
1997 $ 75,000
1998 75,000
1999 75,000
2000 75,000
2001 75,000
Thereafter 925,000
$1,300,000
</TABLE>
7. Deferred income on dispositions of land:
Deferred income on the prior dispositions of land is amortized to
operating income under a method that coordinates the sharing of
the net gains from land sales between the Company's shareholders and
ratepayers in accordance with a rate making formula approved by the DPUC.
Amortization of deferred income and related taxes to be included in
future years operating income for land sales completed as of the balance
sheet date follow:
<TABLE>
<CAPTION>
Amortization To Be
Deferred Included In
Year ending December 31: Deferred Income Income Taxes Operating Income
<S> <C> <C> <C>
1997 $ 299,883 $124,718 $175,165
1998 231,777 96,148 135,629
1999 171,578 71,093 100,485
2000 126,387 52,506 73,881
2001 87,233 36,382 50,851
Thereafter 104,966 43,558 61,408
$1,021,824 $424,405 $579,419
</TABLE>
The amortization of deferred income on prior land sales does not include
the effect of anticipated future land sales under the Company's ongoing
land sales program.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
8. Income taxes:
The provisions for taxes on income for the years ended December 31, 1996,
1995 and 1994 consist of:
<TABLE>
<CAPTION>
<S> 1996 1995 1994
Current: <C> <C> <C>
Federal $318,311 $212,705 $ 26,820
State 112,765 111,526 20,838
Deferred:
Federal:
Accelerated depreciation 81,714 117,076 96,405
Alternative minimum tax credit
Income on land dispositions 15,127 (112,489) 65,821
Investment tax credit (14,700) (14,700) (14,700)
Construction advances and other (5,071) (6,165) (9,137)
State 2,420 30,372 25,156
$510,566 $354,436 $186,861
</TABLE>
State deferred income taxes relate solely to timing differences in the
recognition of income related to land dispositions.
A reconciliation of the income tax expense at the federal statutory tax
rate of 34 percent to the effective rate follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S>
Federal income tax at statutory <C> <C> <C>
rates $433,603 $296,650 $185,500
Increase (decrease) resulting
from:
State income tax, net of federal
benefit 72,828 93,653 30,356
Rate case expense 4,536 (9,103) 9,187
SFAS 106 expense in excess of
funding 768 2,068 995
Other, net 13,531 (14,132) (24,477)
Investment tax credit (14,700) (14,700) (14,700)
Total provision for income taxes 510,566 354,436 186,861
Taxes related to land dispositions (382,107) (286,694) (90,977)
Operating provision for taxes $128,459 $ 67,742 $ 95,884
</TABLE>
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
8. Income taxes (continued):
Deferred tax liabilities (assets) were comprised of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Depreciation $1,572,362 $1,483,004
Investment tax credits 363,961 378,661
Other 229,181 251,598
Gross deferred tax liabilities 2,165,504 2,113,263
Land sales (424,405) (441,952)
Alternative minimum tax (2,228) (164,879)
Other (253,899) (242,500)
Gross deferred tax assets (680,532) (849,331)
Total deferred income taxes $1,484,972 $1,263,932
</TABLE>
9. Related party transactions:
The Company has paid legal and consulting fees to firms whose partners are
directors and shareholders of the Company. During the years ended
December 31, 1996, 1995 and 1994 fees paid amounted to $32,378, $34,748,
and $27,912, respectively. Amounts due to these firms at year end are
not significant.
10.Allowance for doubtful accounts:
<TABLE>
<CAPTION>
1996 1995 1994
<S>
Allowance for doubtful accounts, <C> <C> <C>
beginning $75,000 $75,000 $100,000
Provision 43,237 46,712 42,487
Recoveries 8,549 13,036 1,916
Charge-offs (51,786) (59,748) (69,403)
Allowance for doubtful accounts,
ending $75,000 $75,000 $ 75,000
</TABLE>
11.Supplemental information:
Amortization of deferred charges follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Rate case and other $62,596 $62,592 $ 71,391
Debt issue costs 14,934 14,934 13,658
$77,530 $77,526 $85,049
</TABLE>
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
11.Supplemental information (continued):
The Company has received revenues through the rate making process to
recover the amortization of deferred charges.
12.Postemployment benefits:
Pension plan:
<TABLE>
<CAPTION>
The plan's funded status and related pension accrual follows:
1996 1995
<S>
Actuarial present value of benefit
obligations: Accumulated benefit obligation,
including vested benefits of $523,864 in 1996 <C> <C>
and $413,926 in 1995 $537,226 $419,625
Projected benefit obligation (742,517) (562,788)
Plan assets at fair value 502,793 460,380
Projected benefit obligation in excess
of plan assets (239,724) (102,408)
Unrecognized prior service cost (44,183) (46,437)
Unrecognized deferred loss 194,709 71,173
Other liability (33,311) -
Unrecognized net obligation at transition 88,077 93,949
Prepaid (accrued) pension obligation included
in accounts payable accrued liabilities ($ 34,432) $ 16,277
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
the projected benefit obligations was 7.0% in 1996 and 7.5% in 1995.
The expected long-term rate of return on assets was 8.0% and 8.5% in
1996 and 1995, respectively.
Net periodic pension costs include the following components:
1996 1995 1994
Service cost $40,780 $30,077 $23,945
Interest cost on projected benefit
obligation 46,694 38,004 34,843
Amortization of net loss from prior
years 8,065 6,167 3,182
Amortization of net obligation at
transition 5,872 5,872 5,872
Amortization of unrecognized prior
service cost (2,254) (2,263) (2,271)
Deferred gain (loss) (13,119) 61,097 (39,600)
Actual return on assets (24,638) (91,892) 9,507
Net pension cost $61,400 $47,062 $35,478
</TABLE>
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
12.Postemployment benefits (continued):
Employer matching contributions to the 401(k) plan were $14,372, $7,731
and $6,722 in 1996, 1995 and 1994, respectively.
Other postretirement benefit:
The net periodic postretirement benefit cost includes the following
components:
<TABLE>
<CAPTION>
1996 1995 1994
<S>
Service cost-benefits earned during <C> <C> <C>
the period $19,612 $22,268 $15,230
Interest cost on benefit obligation 29,385 29,700 35,205
Actual return on plan assets (16,003) (27,185) 2,376
Net amortization and deferral (8,985) 11,430 (13,704)
Amortization of transition
obligation 25,378 25,378 25,378
Net periodic postretirement benefit
cost $49,387 $61,591 $64,485
The funded status and the related accrual for postretirement benefits
other than pensions were as follows:
1996 1995
Accumulated postretirement benefit obligation:
Retirees ($234,544) ($233,530)
Other vested ( 196,674) ( 205,659)
( 431,218) ( 439,189)
Plan assets at fair value 214,759 170,275
Accumulated postretirement obligation in excess
of plan assets ( 216,459) ( 268,914)
Unrecognized net gain ( 189,588) ( 162,512)
Unrecognized net transition obligation 406,047 431,426
Accrued postretirement benefit cost included in
current assets $ 0 $ 0
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% in 1996 and 1995. The
expected long-term rate of return on assets was 7.5% in 1996 and 1995.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
12.Postemployment benefits (continued):
Other postretirement benefits (continued):
For measurement purposes, a 11.0% annual increase in the per capita cost
of covered health care benefits was assumed for 1997. This rate was
assumed to decrease gradually to 6% for 2004 and remain at that level
thereafter. A 1% increase in health care cost trend rate assumptions
would produce an increase in the accumulated postretirement benefit
obligation at December 31, 1996 of $70,121 and an increase in the
aggregate service and interest cost of the net periodic postretirement
benefit cost of $9,597.
The Company has established tax effective funding vehicles for such
retirement benefits in the form of a qualified Voluntary Employee
Beneficiary Association (VEBA) trust. The Company funded the VEBA trust
with tax deductible contributions totaling $49,387, $57,767 and $61,559
in 1996, 1995 and 1994, respectively.
The Company president's employment contract requires accounting for
benefits payable in accordance with SFAS 106. The accumulated present
value of future benefits attributable to the Company's president is being
recognized over his remaining years of service to retirement. The
liability recorded at December 31, 1996 and 1995 was $112,818 and
$88,987, respectively. At December 31, 1996, an amount of $70,818 has
been included in other assets relating to a regulatory asset for costs
which were included in the Company's rate case.
13.Commitments and contingent liabilities:
Leases:
The Company leases equipment under several noncancellable operating leases
expiring through 2001. Total minimum rentals under noncancellable
operating leases are as follow:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1997 $11,341
1998 11,808
1999 8,990
2000 5,841
2001 467
$38,447
</TABLE>
Lease expense was $27,903 in 1996, $35,274 in 1995 and $31,173 in 1994,
respectively.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
13. Commitments and contingent liabilities (continued):
Management agreement:
The Company maintains an agreement with the City of Derby (the "City"),
pursuantto which agreement, the Company manages the water system owned
by the City. The Company is responsible for costs of maintenance and
improvements. Amounts collected from customers, net of expenses, are
retained by the Company.
Capital budget:
Management has budgeted $1,430,000 for capital expenditures in 1997,
$225,000 of which is expected to be necessary to meet its service
obligations for the coming year. The balance of the capital budget
depends on the Company's ability to raise additional capital.
Purchase commitment:
The Company has an agreement with South Central Connecticut Regional
Water Authority to purchase water. This agreement provides for a
minimum purchase of 600 million gallons of water annually. Charges to
expense were $680,125, $743,904, and $690,000 for the years 1996,
1995 and 1994, respectively. The purchase price is based on South
Central Connecticut Regional Water Authority's wholesale rate. At
December 31, 1996, this rate was approximately $1,150 per million
gallons. This agreement expires December 31, 2015 and provides for
two ten year extensions at the Company's option.
14. Rate matters:
On December 27, 1995, the DPUC granted the Company an increase in annual
revenues of $289,333 (6.89% increase) effective January 1, 1996.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
15. Equity:
Stock option plans:
On September 13, 1994, the Company adopted two stock option plans. A
non-employee director stock option plan and a key employee incentive
stock option plan. 40,000 and 35,000 shares respectively were authorized
under the two plans which provide for options to purchase common stock
of the Company at the fair market value at the date of the grant. The
options vest over various periods and must be exercised within 10 years
from date of grant. The following table summarizes the issuance of
options for the Company's common stock:
<TABLE>
<CAPTION>
Granted Exercisable
Number Weighted Average Number Weighted Average
of Shares Exercise Price of Shares Exercise Price
<S>
Granted during <C> <C> <C> <C>
1994 54,000 $10.50
December 31, 1994 54,000 $10.50 - -
Granted during 1995 3,750 $11.00
December 31, 1995 57,750 $10.53 22,750 $10.50
Granted during 1996 5,000 $ 8.50
December 31, 1996 62,750 $10.37 55,875 $10.52
</TABLE>
All of the options granted in 1996 and 1995 were granted under the non-
employee director stock option plan. As of December 31, 1996, no options
granted under the plans had been exercised or forfeited. On January 1,
1996, the Company adopted Statement of Financial Accounting Standards
No. 123 - "Accounting for Stock Based Compensation" (SFAS 123). As
permitted by SFAS 123, the Company has chosen to apply Accounting
Principles Board Opinion No. 25 - "Accounting for Stock Issued to
Employees" (APB 25) and related interpretations in accounting for
stock based compensation. There being no grants of options to employees
in 1996 or 1995, there was no material effect on the Company's results of
operations in those years.
Dividend reinvestment plan:
On September 13, 1994, the Company adopted a dividend reinvestment plan
which provides for the issuance and sale of up to 70,000 shares of the
Company's authorized but unissued common stock to its shareholders who
elect to reinvest cash dividends on the Company's existing shares. Shares
under the plan will be purchased at their fair market value price on the
date of the dividends to be invested in the new shares. The following
table summarizes the activity in common shares related to the dividend
reinvestment plan:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Number of shares issued 5,610 3,114
Value of shares when issued $51,386 $31,108
</TABLE>
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
16.Supplemental disclosure of cash flow information and noncash financing
activities:
Cash paid for interest for the years ended 1996, 1995 and 1994 was
$574,993, $608,764 and $557,909, respectively.
Cash paid for income taxes for the years ended 1996, 1995 and 1994 was
$539,200, $188,575, and $82,200, respectively.
The Company receives contributions of plant from developers. These
contributions are reported in utility plant and in customers' advances for
construction. The contributions are deducted from construction expenditures
to determine cash expenditures by the Company.
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Gross plant additions $1,518,142 $671,390 $696,340
Customers' advances for
construction ( 56,990) ( 71,112) ( 76,567)
$1,461,152 $600,278 $619,773
</TABLE>
BIRMINGHAM UTILITIES, INC.
SCHEDULE IX - SHORT TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Weighted
Average average
Weighted Maximum amount interest
Category of Balance interest outstanding outstanding rate
short-term at the end rate at end during during during the
borrowings of period of period the period the period period
<S>
Year ended
December 31,
1996 <C> <C> <C> <C> <C>
Notes payable $125,000 8.38% $480,000 $39,083 8.45%
Year ended
December 31,
1995
Notes payable $ 75,000 8.53% $408,717 $138,199 8.63%
Year ended
December 31,
1994
Notes payable $165,000 7.93% $165,000 $ 52,250 6.97%
</TABLE>
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The following list identifies all current directors of the Company.
No directoror executive officer has (i) any family relationship with any other
such person or (ii) been involved in any legal proceeding which would require
disclosure under Item 401 of Regulation S-K. There are no arrangements
between any director or officer and any other person pursuant to which he or
she was or is to be selected as a director or officer or as a nominee
therefor.
<TABLE>
<CAPTION>
Business Experience during the Last Director
Name Age Five Years and Other Directorships Since
<S> <C> <C> <C>
Stephen P. Ahern 67 V.P., Ogden Allied Security Services; 1994
Principal, Ahern Builders
Edward G. Brickett 67 Retired; Director of Finance, Town of 1979
Southington, CT until June, 1995.
James E. Cohen 50 Lawyer in Practice in Derby; Director 1982
Great Country Bank 1987-1993
Betsy Henley-Cohn 44 Chairwoman of the Board of Directors 1981
of the Company since May of 1992;
Chairman and Treasurer, Joseph Cohn & Sons,
Inc., (painting contractors); Director,
United Illuminating Corp. and Aristotle
Corp.; Director, Society for Savings
Bancorp,Inc. (1985-1993).
Aldore J. Rivers 63 President of the Company 1986
B. Lance Sauerteig 51 Lawyer in Practice in Westport; Principal 1996
in BLS Strategic Capital, Inc. (financial
and investment advisory company); previously,
President First Spring Corporation, 1986-1994
(private family investment management company);
Director OFFITBANK (a New York based private
investment management bank)
Kenneth E. Schaible 55 Banking Consultant/Developer since 1996; 1994
Senior Vice President, Webster Bank
1995-1996; previously, President Shelton
Savings Bank and Shelton Bancorp, Inc.
1967 to 1995
Charles T. Seccombe 70 President and Treasurer, Seccombe's Men's 1967
Shop, Inc. (retail clothing business)
David Silverstone 50 Lawyer in Practice in Hartford 1994
</TABLE>
(b) Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten-percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission and the Company.
Based solely on review of copies of such forms furnished to the Company,
or written representations that no reconciliation forms were required, the
Company believes that during fiscal year ending December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent shareholders were complied with.
Item 11. Compensation of Directors and Executive Officers
Directors: The Company's Directors, except for Ms. Henley-Cohn and
Mr. Rivers, received an annual fee of $3,000 plus $500 for each
full Board meeting and $300 for each Committee meeting actually
attended in 1996. Ms. Henley-Cohn received an annual salary of
$49,139 for services in pursuit of land sales during 1996 and as
Chairwoman of the Board of Directors.
Executive Officers: During 1994, the Company had no Executive
Officer whose total annual salary exceeded $100,000. The Company
does not have any long-term incentive plans.
The following table sets forth the annual cash compensation
for Mr. Rivers, the Company's Chief Executive Officer, for each of
1994, 1995 and 1996.
<TABLE>
<CAPTION>
Annual Compensation
Securities
Name and Underlying
Principal Position Year Salary* Bonus Options**
<S>
Aldore J. Rivers,
President, <C> <C> <C> <C>
CEO and Director 1994 $ 92,945 N/A 10,000
1995 $101,404 $2,500 N/A
1996 $105,404 N/A N/A
</TABLE>
* Includes the economic benefit of premiums on a split-dollar life
insurance policy pursuant to which Mr. Rivers is the Insured and
the Company is the owner and paid the premiums in 1994, 1995 and
1996.
**On September 13, 1994, the Company's Board of Directors approved
the Birmingham Utilities, Inc. 1994 Stock Incentive Plan (The "1994
Plan"), subject to approval by the Company's shareholders and by
the Connecticut Department of Public Utility Control (DPUC"). The
amounts set forth in the table above, represent the award of
options to Mr. Rivers which vested on September 12, 1996. None of
the options have been exercised, and there were no options granted
to Mr. Rivers in 1996.
Employment Agreement and Split-Dollar Insurance Plan:
The Company entered into an Employment Agreement with Mr.
Rivers in 1990 (the" Employment Agreement"), pursuant to which the
Company agreed to employ Mr. Rivers as President of the Company for
a period of five years, until August of 1996. The Employment
Agreement was amended in 1992 and 1993.
The Employment Agreement, as amended, provides for a so-called
"Split Dollar Life Insurance" plan for the benefit of both the
Company and Mr. Rivers. The plan provides for the Company to
maintain insurance on Mr. Rivers' life in an amount not less than
$150,000, and to pay to Mr. Rivers' designee $150,000 if he should
die on or before the age of 65. The balance of the life insurance
proceeds, if any, may be retained by the Company. If Mr. Rivers
dies after reaching the age of 65, all death benefits of the policy
are retained by the Company. The Company has agreed to make one
hundred eighty (180) monthly supplemental pension payments of
$1,170 each to Mr. Rivers commencing when he reaches the age of 65
and continuing until the earlier of his death or the end of the
180-month period. The Company expects to use the proceeds of the
life insurance to reimburse itself for the supplemental pension
payments that may be made to Mr. Rivers after his 65th birthday.
Item 12. Security Ownership of Management and Certain Beneficial
Owners
(a) The following table sets forth certain information with
respect to the only persons, to the knowledge of the Company, who
own as much as 5% of the Company's stock as of February 26, 1996.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Of Class
<S> <C> <C> <C>
Group consisting of Cohn Realty & Investment, 181,550 Shares (1) 23.95%
Betsy Henley-Cohn, John J. Crawford, as custod-
ian for Juri Henley-Cohn, and as custodian for
Jesse Henley-Cohn, Joel Cohn Revocable Trust 1A,
Betsy Cohn Spray Trust, Harry Berkowitz Revocable
Trust, Betsy Cohn Income Trust, Rosenfield-
Weisman Trust, 441 Chapel St., New Haven, CT 06510,
and Ruth Weisman, 26 Kohary Drive, New Haven, CT 06515.
John J. Crawford, 70 Indian Road,
Guilford, CT 06437 66,262 Shares (2) 8.81%
</TABLE>
(1) Of the 181,550 shares owned by this Group, Cohn Realty & Investment (a
Connecticut general partnership consisting of three investment trusts
whose managing agent is Betsy Henley-Cohn, whose beneficiaries are certain
members of the Cohn Family and whose Trustees are Rhoda Cohn and Stanley
Bergman) has beneficial ownership of 35,640 shares; John J. Crawford,
as custodian for Juri Henley-Cohn, has beneficial ownership of 21,785
shares; John J. Crawford, as custodian for Jesse Henley-Cohn, has
beneficial ownership of 22,091 shares; Joel Cohn Revocable Trust 1A has
beneficial ownership of 26,060 shares; Betsy Cohn Spray Trust has
beneficial ownership of 32,188 shares; Betsy Cohn Income Trust has
beneficial ownership of 10,460 shares; Harry Berkowitz Revocable Trust
has beneficial ownership of 16,098 shares; Rosenfield-Weisman Trust has
beneficial ownership of 7,000 shares and Ruth Weisman has beneficial
ownership of 10,228 shares. Betsy Henley-Cohn has either a controlling
or a beneficial interest in Cohn Realty & Investment, Betsy Cohn
Spray Trust and Betsy Cohn Income Trust. No member of the Group owns
or has the right to acquire, directly or indirectly, any other shares.
Unless otherwise indicated, the named beneficial owner of the shares
has sole voting and dispositive power with respect thereto. The
information set forth in this footnote is derived from a filing with
the Securities and Exchange Commission made by the Group.
(2) Includes 5,830 shares held jointly by Mr. Crawford and his wife, 22,091
shares held by Mr. Crawford as custodian for the benefit of Jesse Henley
-Cohn, and 21,785 shares held by Mr. Crawford as custodian for the
benefit of Juri Henley-Cohn. Mr. Crawford has sole voting power over
the shares held for the benefit of Jesse Henley-Cohn and Juri Henley-
Cohn, but has no family relationship with Jesse Henley-Cohn or Juri
Henley-Cohn. The 22,091 shares held in trust for the benefit of Jesse
Henley-Cohn and the 21,785 shares held in trust for the benefit of Juri
Henley-Cohn are also included in the shares set forth in footnote (1),
above, as being held by John J. Crawford as custodian for Jesse Henley-
Cohn and Juri Henley-Cohn.
(b) The following table sets forth certain information concerning
ownership of the Company's Shares by management:
<TABLE>
<CAPTION>
Common Shares
Beneficially Owned Percent
Name As of February 26, 1995 of Class
<S> <C> <C>
Stephen P. Ahern 13,403 (1) 1.77
Edward G. Brickett 3,550 .47
James E. Cohen 33,598 (2) 4.43
Betsy Henley-Cohn 181,550 (3) 23.95
Aldore J. Rivers 2,051 .27
B. Lance Sauerteig 200 .03
Kenneth E. Schaible 980 .13
Charles T. Seccombe 8,169 (4) 1.08
David Silverstone 109 .01
Executive Officers and
Directors as a
group, 8 in number 243,610 32.14
</TABLE>
(1) Includes 1,700 shares owned by Ahern Family Limited Partnership.
(2) Includes 32,598 shares held by Mr. Cohen, as Trustee of the David B. Cohen
Family Trust, and 1,000 shares held in a brokerage custodial account for
Mr. Cohen's benefit.
(3) Ms. Henley-Cohn is a member of the shareholder group described in the
preceding table. The 181,550 shares set forth in this table is the
aggregate number of shares held by all of the members of the group.
See note (1) to the preceding table for information concerning shares
beneficially held by Ms. Henley-Cohn.
(4) All of which are held in a Trust, of which Mr. Seccombe is the Grantor and
Trustee.
Item 13. Certain Relationships and Related Transactions
Mr. Cohen is a partner in the law firm of Cohen and Thomas, which
has represented the Company on occasions in past years; the Company
may continue to employ that firm on occasion in the future.
Seccombe's Men's Shop, owned by Mr. Seccombe, in downtown Ansonia
has been utilized as a collection facility for the paying of bills
and will be used in that capacity in the future.
Mr. Silverstone is a partner in the law firm of Silverstone &
Koontz, which represented the Company on rate matters in 1995 and
may do so in the future.
Mr. Sauerteig is a principal in the law firm of Levett, Rockwood
and Sanders, which provided legal services to the Company in 1996
and may do so in the future.
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) (1) and (2). See Index to Item 8. Financial Statements and
Supplementary Data are herein incorporated by reference.
(3) Certificate of Incorporation and By-Laws of Birmingham
Utilities, Inc. Incorporated herein by reference is Exhibit 3 of
Birmingham Utilities, Inc.'s Annual Report on Form 10K for the
period ended December 31, 1994.
(4) Instruments Defining Rights of Security Holders
(i) Amended and Restated Mortgage Indenture by and between
The Ansonia Derby Water Company and The Connecticut National Bank
as Trustee, dated as of August 9, 1991. Incorporated herein by
reference is Exhibit (4) (i) of The Ansonia Derby Water Company's
Annual Report on Form 10-K for the period ending December 31, 1991.
(ii) Commercial Term and Revolving Loan Agreement by and
between Birmingham Utilities, Inc. and Fleet Bank, N.A., dated
April 29, 1994. Incorporated herein by reference is Exhibit 10(1)
of the Quarterly Report on Form 10-Q/A of Birmingham Utilities,
Inc. for the period ended June 30, 1994.
(iii) Birmingham Utilities, Inc. Dividend Reinvestment Plan,
adopted by its Board of Directors on September 13, 1994.
Incorporated herein by reference is Exhibit 4 (iii) of Birmingham
Utilities, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1994.
(10) Material Contracts
(10.1) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated January 18, 1984 for the sale of water by the
Authority to the Company and subsequent amendment dated December
29, 1988. Incorporated herein by reference is Exhibit (10.1) of the
Annual Report on Form 10-K of Birmingham Utilities, Inc. for the
period ended December 31, 1993.
(10.2) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated November 30, 1984 for the sale by the Authority to
the Company of water and for the construction of the pipeline and
pumping and storage facilities in connection therewith by the
Authority at the expense primarily of the Company and Bridgeport
Hydraulic Company. Attached hereto as pp. 46 to 82.
(10.3) Employment Agreement between The Ansonia Derby Water
Company and Aldore J. Rivers dated August 5, 1990, as amended by
amendments dated July 28, 1992 and April 20, 1993. Incorporated
herein by reference is Exhibit (10.6) of the Annual Report on Form
10-K of Birmingham Utilities, Inc. for the period ended December
31, 1993.
(10.4) Birmingham Utilities, Inc. 1994 Stock Incentive Plan
adopted by its Board of Directors on September 13, 1994.
Incorporated herein by reference is Exhibit (10.9) of Birmingham
Utilities, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1994.
(10.5) Birmingham Utilities, Inc. Stock Option Plan for Non-
Employee Directors adopted by its Board of Directors on September
13, 1994. Incorporated herein by reference is Exhibit (10.10) of
Birmingham Utilities, Inc.'s Annual Report on Form 10-K for the
period ended December 31, 1994.
(10.6) Purchase and Sale Agreement by and between Birmingham
Utilities, Inc. and M/1 Homes, LLC dated March 18, 1997 for the
sale by the Company to M/1 Homes of approximately 245 acres of
unimproved land in Seymour, Connecticut. Attached hereto as pp.
83 to 104.
(23) Consent of Price Waterhouse LLP
(23.1) Consent of Dworken, Hillman, LaMorte & Sterczala, P.C.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Registrant during the last quarter of 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
(Registrant) BIRMINGHAM UTILITIES, INC.
BY:/s/ Betsy Henly-Cohn
Betsy Henley-Cohn
Chairwoman of the Board
BY:/s/ Leroy A. DeFrances
Leroy A. DeFrances
Controller
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
/s/ Stephen P. Ahern /s/ B. Lance Sauerteig
Stephen P. Ahern, Director B. Lance Sauerteig, Director
Date: March 14, 1997 Date: March 14, 1997
/s/ Edward G. Brickett /s/ Charles T. Seccombe
Edward G. Brickett, Director Charles T. Seccombe, Director
Date: March 14, 1997 Date: March 14, 1997
/s/ James E. Cohen /s/ Kenneth E. Schaible
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March 14, 1997 Date: March 14, 1997
/s/ Betsy Henley-Cohn /s/ David Silverstone
Betsy Henley-Cohn, Chairwoman David Silverstone, Director
Board of Directors Date: March 14, 1997
Date: March 14, 1997
/s/ Aldore J. Rivers
Aldore J. Rivers, President
Date: March 14, 1997
DATE: March 14, 1997
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statements of Birmingham Utilities, Inc. on Form S-8
dated July 25, 1995 and in the Prospectus constituting part of the
Registration Statement of Birmingham Utilities, Inc. on Form S-3
dated June 12, 1995 of our report dated February 24, 1995, which
appears on page 13 of the Annual Report on Form 10-K of Birmingham
Utilities, Inc. for the year ended December 31, 1996.
Price Waterhouse LLP
New York, New York
March 25, 1997
Dworken, Hillman, LaMorte & Sterczala, P.C.
We hereby consent to the incorporation by reference in the
Registration Statements of Birmingham Utilities, Inc. on Form S-8
dated July 25, 1995 and in the Prospectus constituting part of the
Registration Statement of Birmingham Utilities, Inc. on Form S-3
dated June 12, 1995 of our report dated February 14, 1995, which
appears in the Annual Report on Form 10-K of Birmingham
Utilities, Inc. for the year ended December 31, 1996.
/s/ Dworken, Hillman, LaMorte & Sterczala, P.C.
March 25, 1997
BIRMINGHAM UTILITIES, INC.
INDEX TO EXHIBITS
Item No. Page No.
10.2 Agreement to Purchase Water by and between
The Ansonia Derby Water Company and South
Central Connecticut Regional Water Authority . . . 46
10.6 Purchase and Sale Agreement by and between
Birmingham Utilities, Inc. and M/1 Homes, LLC. . . 83
APPENDIX III-B
WATER PURCHASE AGREEMENT
THE ANSONIA DERBY WATER CO.
and
SOUTH CENTRAL CT REGIONAL WATER AUTHORITY
dated
November 30, 1984
November 30, 1984
Mr. John B. Dearborn, President
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, Connecticut 06401
Dear Mr. Dearborn:
Agreement to Purchase Water By and Between The Ansonia Derby
Water Company (the ("Company") and South Central Connecticut
Regional Water Authority (the "Regional Water Authority"), dated
November 30, 1984 (the "Contract")
This letter shall serve as a confirmation of the Regional Water
Authority's understanding that, in addition to any rights that
the Company may have either at common law or pursuant to the
Contract, if the Regional Water Authority experiences a renewed
outbreak of the bacteria problem it recently experienced or any
similar bacteria problems, to the extent that the water to be
supplied to the Company under the Contract is not in compliance
with all standards imposed by any federal or state agency having
jurisdiction over the quality of public drinking water, and if as
a result of the purchase of such water under the Contract the
Company experiences a similar outbreak of bacteria within the
area of its distribution system served by water supplied under
the Contract, the Regional Water Authority agrees to indemnify
the Company with respect to all necessary expenses to cleanse the
system of such bacteria required by any such governmental agency
with jurisdiction.
Sincerely,
SOUTH CENTRAL CONNECTICUT
REGIONAL WATER AUTHORITY
BY:
Its Chief Operating Officer
Duly Authorized
AGREEMENT
AGREEMENT entered into this 30th day of November, 1984 by
and between SOUTH CENTRAL CONNECTICUT REGIONAL WATER AUTHORITY
(hereinafter referred to as the "AUTHORITY") and THE ANSONIA
DERBY WATER COMPANY (hereinafter referred to as "ANSONIA DERBY").
W I T N E S S E T H:
WHEREAS, ANSONIA DERBY wishes to purchase a portion of its
water supply requirements from the AUTHORITY; and
WHEREAS, the AUTHORITY is willing to sell water to ANSONIA
DERBY; and
WHEREAS, in order to accomplish the purpose stated above,
pipeline and control facilities, tank, pumps, and related items
will be required to be designed, constructed, installed,
maintained and operated between the AUTHORITY's existing water
system and ANSONIA DERBY'S existing water system; and
WHEREAS, the AUTHORITY proposes to design, construct,
install, maintain, replace or repair, and operate such pipeline
and related facilities and thereby to sell water to ANSONIA
DERBY; and
WHEREAS, ANSONIA DERBY proposes to finance and own a portion
of such pipeline and related facilities with the remainder being
owned by the Bridgeport Hydraulic Company; and
WHEREAS, the parties hereto wish to set forth their
respective rights, responsibilities and remedies;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises contained herein, the parties do hereby agree as
follows:
1. Project Definition and Description. The pipeline and
related facilities shall consist of approximately 22,500 feet of
20 inch pipeline, 4,500 feet of 24 inch pipeline, a seven million
gallon per day pumping station, a one million gallon storage tank
(the "Storage Tank"), a meter, and all related appurtenances,
valves, points of connection and other facilities necessary or
desirable to enable the AUTHORITY to deliver water from its water
supply system to the water supply system of ANSONIA DERBY. All
such facilities are herein referred to as the "Project". The AUTHORITY
agrees to design, construct,install, maintain, replace or repair,
and operate the Project. The division of ownership of the various
components of the Project between Bridgeport Hydraulic Company and
ANSONIA DERBY shall be as specified in Exhibit A hereto; provided, however,
that if the total amounts paid by Bridgeport Hydraulic Company
pursuant to Section 3(a) of that certain Agreement dated May 31,
1984 between the AUTHORITY and Bridgeport Hydraulic Company (the
"Bridgeport Hydraulic Agreement") shall differ by an amount in
excess of $100,000 from Bridgeport Hydraulic's Company's
undepreciated book cost (determined in accordance with the
requirements of the Department of Public Utility Control) of that
portion of the Project owned by Bridgeport Hydraulic Company upon
completion of construction of the Project, the parties hereto
agree that the division of ownership of the Project shall be
redetermined at that time in order to match, as closely as
reasonably possible, the ownership portion of the Project of
ANSONIA DERBY and Bridgeport Hydraulic Company, respectively,
with each such party's total investment in the Project, any such
redetermination to be reflected in a written supplement to
Exhibit A hereto. The Project pipeline, pumping station, Storage
Tank, meter, and points of connection to the AUTHORITY's, ANSONIA
DERBY's and Bridgeport Hydraulic Company's water supply systems
shall be at the approximate locations indicated in Exhibit A
hereto. Exhibit A hereto also sets forth the time schedules and deadlines
relating to the project, which schedules and deadlines the AUTHORITY hereby
agrees, subject to Section 14 hereof, to meet, provided, however, that the
AUTHORITY shall in no extent be liable for special or consequential
damages.
The Project is to be more specifically defined by the
complete engineering plans and material and installation
specifications which will be obtained by the AUTHORITY. By way
of illustration and not by way of limitation, said plans shall
delineate the following items:
a. Pipeline Route.
b. Pipeline Diameter.
c. Number and Capacity of Pumps.
d. Description of Surge Control, if required.
e. Description of Pressure Reducing/Flow Control
Facilities, if required.
f. Maps, Hydraulic Profiles and Sketches supplementing,
explaining and diagramming the foregoing.
g. Metering Facilities.
h. Land and Right of Way Acquisition.
j. Description of Storage Tank.
Such engineering plans and specifications shall be furnished for
information purposes to ANSONIA DERBY; however, ANSONIA DERBY
shall have no right of approval with respect thereto.
The standard of design and construction to he used in the
Project is the quality of design and construction used currently
by the AUTHORITY for similar types of facilities. The AUTHORITY
will use its best efforts to keep Project costs as low as
possible while remaining cost effective.
2. Modifications to ANSONIA DERBY Water Supply System.
ANSONIA DERBY agrees to effect, at its own cost, any and all
modifications to its existing water supply system that are
necessary or desirable to enable it to accept delivery of water
through the Project.
3. (a) Out-of-Pocket Expenses. ANSONIA DERBY will
reimburse the AUTHORITY for that portion of out-of-pocket
engineering expenses associated with the Project which are
allocable to ANSONIA DERBY pursuant to Section 4 hereof, payable
on a monthly basis commencing with the end of the month during
which this Agreement is executed.
(b) Financing of Project. ANSONIA DERBY agrees to finance
and to pay that portion of the costs associated with the Project
which are allocable to it pursuant to Section 4 hereof. The
AUTHORITY and Bridgeport Hydraulic Company shall finance and pay
all costs associated with the Project which are not so allocable
to ANSONIA DERBY pursuant to Section 4 hereof. The AUTHORITY may
terminate this Agreement prior to June 1, 1985 if the D.P.U.C.
shall not have approved the Bridgeport Hydraulic Agreement on or
before February 1, 1985. ANSONIA DERBY shall pay to the
AUTHORITY, within 10 days after the AUTHORITY notifies ANSONIA
DERBY that physical construction of the Project has commenced,
$200,000 in partial payment of costs associated with the Project
which are allocable to ANSONIA DERBY pursuant to Section 4
hereof; thereafter, that portion of construction costs which are
allocable to ANSONIA DERBY pursuant to this subsection (b) shall
be appropriately calculated and documented by the AUTHORITY and
billed by the AUTHORITY monthly in arrears, with ANSONIA DERBY
continuing to maintain an advanced payment balance of $200,000
during the construction period. All payments required to be made
pursuant hereto shall be made within 30 days of receipt of an
invoice therefor.
(c) Monthly Payments. ANSONIA DERBY agrees to pay to the
AUTHORITY, monthly and in arrears, the Water Charge, as
determined below, for the particular month. All payments required
to be made pursuant hereto shall be made within 30 days of
receipt of an invoice therefor.
(d) Water Charge. The Water Charge will be calculated as a
charge per million gallons of water delivered each month by the
AUTHORITY to ANSONIA DERBY through the Project (currently $730
per MG) and shall be computed using the cost allocations detailed
in the study entitled "Wholesale Rate Study" prepared by
Guastella Associates, Inc., and dated June 27, 1983, a copy of
which is attached hereto as Exhibit C. It is agreed that this
study will be updated at the time of each rate case of the
AUTHORITY subsequent to the date of this Agreement and that the
Water Charge will be revised to reflect such updating. The
AUTHORITY will give ANSONIA DERBY written notice of any public
hearing on any proposal to raise the wholesale water rates of the
AUTHORITY not later than the date of publication of the public
notice thereof. The amount used in such updating for calculating
the operating and maintenance expenditure portion of the Water
Charge will be based on the budget used by the AUTHORITY for
rate-making purposes and will include any adjustments made during the
rate-making process. The book value of Utility Plant used in such updating
calculation will be based on the most recent filing with the Department of
Public Utility Control. The percentages used to allocate
expenditures to general service as used on Schedule B and
Schedule C-1 of Exhibit C hereof, will not change during the term
of this Agreement. Notwithstanding the foregoing or the amount
of water actually delivered to ANSONIA DERBY, the monthly Water
Charge and the Water Charge for the last month of each calendar
year shall be adjusted if necessary, as provided in Section 6
hereof, to reflect the minimum purchase requirements of Section 6
hereof.
4. Project Allocation. For purposes of Section 3 hereof,
the following portion of the costs associated with the Project
are allocable to ANSONIA DERBY and the remainder (other than that
percentage of the construction and related costs of Section A of
the Project pipeline and the pumping station shown in Exhibit B
hereto as allocable to the AUTHORITY) are allocable to the
Bridgeport Hydraulic Company:
(a) 42% of the construction and related costs of
Section A of the Project pipeline and the pumping station, as
shown on the map contained in Exhibit B hereto.
(b) 60% of the construction and related costs of Section B
of the Project pipeline as shown on the map contained in Exhibit
B hereto.
(c) 1OO% of the cost of the metering facilities located at
the Project's point of connection to ANSONIA DERBY'S water supply
system.
(d) all engineering and construction and related costs of
the Storage Tank, except $112,000, which will be paid by
Bridgeport Hydraulic Company.
(e) That percentage of the engineering costs of the Project
(excluding engineering costs specified in (d) above) which the
amount paid by ANSONIA DERBY pursuant to subsections (a), (b),
(c) and (d) of this Section 4 bears to the total costs associated
with the Project.
The AUTHORITY will change the design flow requirements of
the Project to increase Ansonia Derby's portion of the total
capacity thereof upon receipt of written request to that effect
from Ansonia Derby prior to December 15, 1984, provided, however,
that in such event the foregoing allocations in this Section 4
shall be adjusted by revising the figures inserted in the formula
as specified in Exhibit B hereto.
For purpose of this Section 4, "construction and related
costs" include any of the following costs incurred by the
AUTHORITY subsequent to the execution of this Agreement:
a. Payments to contractors and materialmen constructing,
working on, or supplying materials to the Project.
b. Actual costs of acquisition of property, easements,
rights of way, or the like required for the Project.
c. Actual costs of legal services relating to the Project.
d. Payroll costs (calculated in accordance with the
respective normal practices of the respective parties) for
AUTHORITY personnel, and actual costs for materials used in
design, construction, inspection and installation of the Project.
5. Approvals and Conditions. It is understood by the
parties that this Agreement and/or certain of the transactions
contemplated hereby are subject to approval by the duly
authorized State of Connecticut agencies including the Department
of Health Services and the Department of Environmental Protection.
ANSONIA DERBY and the AUTHORITY agree to cooperate and use their best
efforts in securing all necessary approvals. Neither party shall
have any other obligation under this Agreement unless and until said
requisite approvals are obtained by June 1, 1985, except for ANSONIA
DERBY'S obligation to pay its allocated share of out-of-pocket
engineering expenses pursuant to Section 3(a).
6. Quantities. The AUTHORITY agrees to deliver not less
than three million gallons of potable water per day to ANSONIA
DERBY's point of connection to the Project at a hydraulic
gradient of 450 feet based on U.S.G.S. datum, with a maximum flow
rate for peak demands of not less than six million gallons per
day. ANSONIA DERBY agrees to purchase a minimum quantity of 600
million gallons of potable water per year (the "Annual Minimum")
commencing January 1, 1986 and during the term of this Agreement,
and further agrees during such period that it will purchase a
minimum quantity of 30 million gallons of potable water per month
(the "Monthly Minimum"). Water purchased from the AUTHORITY by
Ansonia Derby pursuant to the contract between them dated January
18, 1984 relating to the Grassy Hill Connection (the "Grassy Hill
Purchase Agreement") shall be Credited against the Annual Minimum
hereunder, and water purchased hereunder shall be credited
against the Annual Minimum contained in the "Grassy Hill Purchase
Agreement".
If ANSONIA DERBY should fail to take the Monthly Minimum in
any calendar month included in the term of this Agreement and
during such calendar month such Monthly Minimum was available for
delivery at the point of delivery to ANSONIA DERBY, then ANSONIA
DERBY shall be deemed to have taken and the AUTHORITY shall be
deemed to have delivered the Monthly Minimum during such month.
If ANSONIA DERBY should fail to take the Annual Minimum in any
calendar year included in the term of this Agreement (including
for purposes of determining the amount taken during any such
calendar year all amounts previously deemed to have been taken
during such year) and during such calendar year such Annual
Minimum was available for delivery at the point of delivery to
ANSONIA DERBY, then ANSONIA DERBY shall be deemed to have taken
and the AUTHORITY shall be deemed to have delivered during
December of such year that amount of water equal to the
difference between the Annual Minimum and the amount of water
taken during such calendar year (including for purposes of
determining the amount taken during any such calendar year all
amounts previously deemed to have been taken during such year).
In the event any partial calendar year is included in the term of
this Agreement, then ANSONIA DERBY shall be deemed to have taken
during the last calendar month so included that amount of water,
if any, necessary in order to result in the ratio of (w) water
taken during such partial calendar year (included for purposes of
determining the amount taken during any such partial calendar year all
amounts previously deemed to have been taken during such calendar year)
to (x) the Annual Minimum being greater than or equal to the
ratio derived by dividing (y) the number of calendar months in
such partial year by (z) 12; provided, however, that during such
partial calendar year an amount of water equal to (i) the Annual
Minimum divided by (ii) the number of calendar months in such
partial calendar year must have been available for delivery at
the point of delivery to ANSONIA DERBY.
7. Water Quality. The water supplied by the AUTHORITY
under this agreement at all times shall satisfy all standards
imposed by any Federal or State agency having jurisdiction over
the quality of public drinking water and applicable to the
AUTHORITY and/or to ANSONIA DERBY; provided, however, that the
AUTHORITY shall have no responsibility for any water quality
problems resulting solely from conditions within the water
distribution system of ANSONIA DERBY.
8. Term of Contract. Subject to the other terms and
conditions contained herein, this contract shall be effective as
of the date of its execution, and will remain in full force and
effect until December 31, 2015, unless otherwise terminated in
accordance with the terms and provisions hereof.
9. Renewal: Purchase upon Termination. This Agreement may
be renewed, at the option of ANSONIA DERBY, for two additional
periods of ten years each after the expiration date referred to
in Paragraph 8 above.
The renewal options referred to above are deemed to be
exercised automatically unless ANSONIA DERBY shall have given
written notification of its election not to renew at least two
years prior to the end of the term of the Agreement then in
effect. The terms and conditions for any such renewal period
shall be the same as provided herein, with ANSONIA DERBY
responsible for the Water Charge, as set forth in Section 3(b)
hereof.
Upon final termination of this Agreement, the AUTHORITY
agrees to purchase from ANSONIA DERBY and ANSONIA DERBY agrees to
sell to the AUTHORITY that portion of the Project then owned by
ANSONIA DERBY at a purchase price equal to the net book value,
defined as original cost less depreciation, of that portion of
the Project owned by ANSONIA DERBY as shown on its books at the
date of such purchase. Upon such purchase ANSONIA DERBY shall
have no further rights with respect to the Project.
11. Metering. ANSONIA DERBY shall own the Project meter
located at ANSONIA DERBY's point of connection to the Project;
the AUTHORITY shall have the right and obligation to maintain
such meter. The meter shall be tested semiannually and if there
is a meter error of five percent or more, adjustment will be made
to ANSONIA DERBY's Water Charge on the basis of one-half the time
elapsed since the last test of the meter in question, unless the
exact period of existence of said error can be conclusively
established. In the event of loss of registration of flow during
any month, ANSONIA DERBY will be deemed to have consumed during
such month an amount of water equal to the historical average
monthly consumption by ANSONIA DERBY for such month determined by
dividing (x) the sum of the consumption by ANSONIA DERBY for such
month in each year commencing with the first such month after
January 1, 1986 and extending to and including such month in the
immediately preceding year, by (y) that number which represents
the total number of years elapsed since the first such month
after January 1, 1986; provided that if such loss of registration
should occur prior to January 1, 1987 ANSONIA DERBY will be
deemed to have consumed during such month an amount of water
equal to that consumed by it during the immediately preceding
month.
12. Acquisition of Property and Interest in Property. Each
party consents to the other's presence on such party's property
to accomplish the purposes of this Agreement. The
parties hereto understand that the Project may require for
completion the acquisition of property and various interests in
property owned by third parties. Any such acquisition shall be
negotiated by the AUTHORITY and the terms thereof shall be
determined in the sole discretion of the AUTHORITY.
13. Use of Project. The parties hereto agree that the
AUTHORITY, ANSONIA DERBY and Bridgeport Hydraulic Company shall
have the right to use the Project to provide water service and
fire protection service to customers within their respective
service territories, and that in furtherance of said right, each
of the parties may effect one or more interconnections with the
Project and may install hydrants and related facilities connected
to the Project so long as such interconnections and facilities
effected by any party are connected to that portion of the
Project lying within the service territory of that party. Each
of the parties shall have the right to bill for, collect and
retain its respective water service and fire protection charges
and revenues resulting from such use of the Project. Nothing
contained in this Section 13 shall be construed to alter or
negate ANSONIA DERBY's obligation to pay for service provided by
the AUTHORITY in accordance with Section 3 hereof. The
AUTHORITY'S right to utilize the Project as set forth in this
Section 13 is subject to the condition that no such use of the
Project by the AUTHORITY shall interfere with, or be inconsistent with,
the AUTHORITY'S obligation to provide water service to ANSONIA DERBY
under the terms of this Agreement.
14. Force Majeure. The AUTHORITY shall not be liable in
damages or otherwise for any failure to perform any obligation
under this Agreement, which failure is occasioned by or in
consequence of any act of God, act of public enemy, war, acts of
terrorism, blockages, insurrection, riot, epidemic, land slide,
lightning, earthquake, fire, storm, flood, washout, civil
disturbance, power failure, explosion, breakage or accident to
machinery or lines of pipe, binding order, decree, regulation or,
judgment of any court or governmental authority, and any other
cause, whether of the kind herein enumerated or otherwise, not
within the control of the AUTHORITY which act, omission, or
circumstance the AUTHORITY is unable to prevent or overcome by
the exercise of due diligence and/or good waterworks practices.
All deadlines relating to construction of the Project provided
for herein (including any such deadline contained in any plan,
map or sketch referred to in Section 1 hereof) shall be extended
for a period of time equal to the period of time that delay in
the Project is caused by any of the causes stated herein (other
than failure to obtain necessary regulatory approvals). Such
causes or contingencies affecting performance by the AUTHORITY
shall not relieve ANSONIA DERBY from its obligation to make
payments required hereunder as they become due, except that the
minimum water purchase requirement of Sections 3(c) and 6 hereof
shall not be in effect when and if the AUTHORITY is unable to
supply such minimum water purchase requirements with water
meeting the requirements of Section 7 hereof.
15. Indemnification. ANSONIA DERBY and the AUTHORITY
hereby agree to indemnify and hold harmless each other against
all costs, fees, expenses, damages and loss of any type or nature
which may be incurred by either party as a result of the breach
of any of the terms of this Agreement by the other party. The
AUTHORITY hereby agrees to indemnify and hold harmless ANSONIA
DERBY against all costs, fees, expenses, damages and loss of any
type or nature (other than obligations of ANSONIA DERBY under
this Agreement) arising out of the construction, maintenance and
operation of the Project; provided, however, that the AUTHORITY
shall not be obligated to so indemnify ANSONIA DERBY for any
costs, etc. resulting from the actions of ANSONIA DERBY, its
agents or employees.
16. All the terms, conditions, and the provisions of this
Agreement shall inure to the benefit of, and be binding upon the
successors and assigns of, the AUTHORITY and ANSONIA DERBY.
17. Default. Upon the occurrence of an event of default by
ANSONIA DERBY hereunder, all sums due to the AUTHORITY for
services performed and water supplied to date shall immediately
become due and payable. In addition to any other remedy provided
for hereunder, in the event of any default by one party
hereunder, the non-defaulting party shall have the right, at its
sole option, to terminate this Agreement and/or to lien any
property of the defaulting party pursuant to statute. each of the
following shall he deemed to be an event of default hereunder:
a. Failure to observe, perform, or comply with any
obligation, condition, or covenant to be observed, performed, or
complied with by any party hereunder within 60 days after sending
notice of default by the non-defaulting party.
b. Default in the payment of any sum due hereunder and the
continuance of such default for 5 days after receipt by the
defaulting party of notice of such default by the non-defaulting
party.
c. The filing by or against any party hereunder of a
petition, arrangement, reorganization, or the like under any
insolvency or bankruptcy law, which filing against such party is
(i) not contested within the appropriate time period and (ii)
not dismissed within 100 days after the expiration of the
appropriate time period for contesting such filing, or the
adjudication of any party hereunder as a bankrupt, or the making
of an assignment for the benefit of creditors, or the appointment
of a receiver for any part of its assets, or if the entity who
then owns the assets of any party hereunder dissolves or
liquidates, or is dissolved or liquidated, or shall legally cease
to exist; provided, however, that the AUTHORITY shall have the
right without liability to ANSONIA DERBY to defer the
construction deadlines set forth in Exhibit A hereto for that
period of time that such a petition, arrangement, reorganization
or the like has been filed against ANSONIA DERBY or Bridgeport
Hydraulic Company and has not been dismissed.
18. Costs, Fees, and Expenses of Enforcement. The
AUTHORITY and ANSONIA DERBY each agree to pay all costs, fees,
expenses or other charges incurred by the other party in
successfully protecting, sustaining or enforcing any term,
provision, or condition of this Agreement against the other,
including without limitation reasonable attorneys' fees.
19. Further Assurances. Upon request, both parties agree
to perform all other acts and execute and deliver all other
documents necessary or advantageous to facilitate and complete
construction of the project, and to carry out the intent and
purposes of the Agreement.
20. Modification. This Agreement constitutes the complete
agreement of the parties, all prior agreements and negotiations
with respect to the subject matter of this Agreement are merged
herein, and no modification or cancellation of this Agreement
shall be effective unless in writing and signed by both parties
hereto.
21. Notice. Any notice or demand required, permitted or
desired to be given pursuant to any of the provisions of this
Agreement shall be deemed to have been given in accordance with
the terms of this Agreement if delivered in person to the persons
designated below or their successors, or sent by registered mail,
return receipt requested, postage prepaid, to the following
addresses:
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, Connecticut 06401
Attention: John B. Dearborn President
South Central Connecticut
Regional Watt@r Authority
90 Sargent Drive
New Haven, Connecticut 06511-5966
Attn: George E. Block, Jr., P.E.
Director of Engineering
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands and seals as of the 30th day of November, 1984.
SOUTH CENTRAL CONNECTICUT
REGIONAL WATER AUTHORITY
By
Its Chief Operating Officer
Duly Authorized
THE ANSONIA DERBY WATER COMPANY
By
Its President
Duly Authorized
Sheet 2 of 2
EXHIBIT A
Project Schedule
Submit Finished Design of Inter-
connection Facilities to Department
of Health Services March 1, 1985
Complete Bidding and Award Contracts June 1, 1985
Complete Construction of Facilities
and Place in Service January 1, 1986
[MAP]
[CALCULATION OF PROJECTED SHARES]
November 8, 1984
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, CT 06401
Attention: John B. Dearborn, President
Re: Agreement to Purchase Water By and Between The Ansonia Derby
Water Company (the "Company") and South Central Connecticut
Regional Water Authority (the "Regional Water Authority"), dated
January 18, 1984 (the "Contract")
Dear Mr. Dearborn:
This letter shall serve as a confirmation of t@e Regional Water
Authority's understanding that, in addition to any rights that
the Company may have either at common law or pursuant to the
Contract, if the Regional Water Authority experiences a renewed
outbreak of the bacteria problem it recently experienced or any
similar bacteria problems, to the extent that the water to be
supplied by the Company under the Contract is not in compliance
with all standards imposed by any federal or state agency having
jurisdiction over the quality of public drinking water, and if as
a result of the purchase of such water under the Contract the
Company experiences a similar outbreak of bacteria within the
area of its distribution system served by water supplied under
the Contract, the Regional Water Authority agrees to indemnify
the Company with respect to all necessary expenses required by
any such governmental agency with jurisdiction to cleanse the
system of such bacteria.
Sincerely,
SOUTH CENTRAL CONNECTICUT
REGIONAL WATER AUTHORITY
By
Its Executive Director
Duly Authorized
November 8, 1984
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, Connecticut 06401
Attention: John B. Dearborn
Gentlemen:
SOUTH CENTRAL CONNECTICUT REGIONAL WATER AUTHORITY (the "AUTHORITY") hereby
agrees with you to amend the Agreement to Purchase Water dated January 18,
1984, between the AUTHORITY and you (the "Agreement") and such Agreement is
hereby amended as follows:
1. Section 1 of the Agreement is amended by deleting the word "size"
in the second sentence thereof and inserting in lieu thereof the
word "location."
2. Section 1 of the Agreement is further amended by deleting the
comma following the word "pipeline" in the second sentence
thereof, and by deleting the phrase "its location and necessary
control facilities" from the second sentence thereof.
3. Section 4 of the Agreement is amended by inserting the phrase
"(the "Annual Minimum")" in the second sentence thereof between
the words "year" and "during", and by inserting the phrase "(the
"Monthly Minimum")" in the second sentence thereof between the
words "month" and "during".
4. Section 4 of the Agreement is further amended by inserting the
following as the second paragraph thereof:
If the COMPANY should fail to take the Monthly Minimum in
any calendar month included in the term of this Agreement
and during such calendar month such Monthly Minimum was
available for deliver at the point of delivery to the
COMPANY, then the COMPANY shall be deemed to have taken and
the AUTHORITY shall he deemed to have delivered the Monthly
Minimum during such month. If the COMPANY should fail to
take the Annual Minimum in any calendar year included in the
term of this Agreement (including for purposes of
determining the amount taken during any such calendar year
all amounts previously deemed to have been taken during such
year) and during such calendar year such Annual Minimum was
available for delivery at the point of delivery to the
COMPANY, then the COMPANY shall be deemed to have taken and
the AUTHORITY shall be deemed to have delivered during
December of such year that amount of water equal to the
difference between the Annual Minimum and the amount of
water taken during such calendar year (including for
purposes of determining the amount taken during any such
calendar year all amounts previously deemed to have been
taken during such year). In the event any partial calendar
year is included in the term of this Agreement, then the
COMPANY shall be
The Ansonia Derby Water Company
Page Two
deemed to have taken during the last calendar month so
included that amount of water, if any, necessary in order to
result in the ratio of (w) water taken during such partial
calendar year (including for purposes of determining the
amount taken during any such partial calendar year all
amounts previously deemed to have been taken during such
calendar year) to (x) the Annual Minimum being greater than
or equal to the ratio derived by dividing (y) the number of
calendar months in such partial year by (z) 12; provided,
however, that during such partial calendar year an amount of
water equal to (i) the Annual minimum divided by (ii) the
number of calendar months in such partial calendar year must
have been available for delivery at the point of delivery to
the COMPANY.
5. Section 5 of the Agreement is amended by deleting the phrase "the
point of metering (which shall be considered to be the point of
delivery)" in the first sentence thereof and inserting in lieu
thereof the phrase "the downside face of the meter located at the
end of the connecting pipeline referred to in Section 1 of this
Agreement (which for all purposes of this Agreement shall be
deemed to be the point of delivery)".
6. Section 9 of the Agreement is amended by inserting in the first
sentence of the second paragraph thereof between the words
"delivered" and "during" the phrase "(or deemed to be delivered)".
If the foregoing amendment is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this letter and return
such counterpart to the AUTHORITY, whereupon this Amendment to the Agreement
will become binding between us in accordance with its terms and as if fully
set forth in the Agreement.
THE ANSONIA DERBY WATER COMPANY SOUTH CENTRAL CONNECTICUT
REGIONAL WATER AUTHORITY
By By
Its President Its Executive Director
AGREEMENT TO PURCHASE WATER
AGREEMENT entered into this 18th day of January, 1984 by and
between THE SOUTH CENTRAL CONNECTICUT REGIONAL WATER AUTHORITY
(hereinafter referred to as the "AUTHORITY") and THE ANSONIA
DERBY WATER COMPANY (hereinafter referred to as the "COMPANY")
WHEREAS, the COMPANY wishes to purchase a portion of its
water supply requirements from the AUTHORITY; and
WHEREAS, the AUTHORITY is willing to sell specific amounts
of water to the COMPANY; and
WHEREAS, in order to accomplish the purposes stated above,
pipeline, control facilities, and related items (collectively,
the "Project") will be required to be designed, constructed and
installed between the location of the AUTHORITY's existing water
system and the COMPANY's existing water system; and
WHEREAS, the parties hereto wish to set forth the respective
rights, responsibilities and remedies of the parties.
NOW THEREFORE, in consideration of the premises and of the
mutual agreements contained herein, the parties hereto intending
to be bound, agree as follows:
1. Connection Between Water Systems - The AUTHORITY will
construct a pipeline from its Grassy Hill Tank in Orange,
Connecticut to the COMPANY's water system in Derby, Connecticut.
The size of this connecting pipeline, its location and necessary
control facilities will be as recommended by the COMPANY's
Consulting Engineer, Roald Haestad, Inc. of Waterbury,
Connecticut and as approved by the AUTHORITY. The design
criteria for the connection will be that it is sufficient in
capacity to meet maximum day and peak hour demands for the
portion of the COMPANY's water system currently served by the
Derby Hill (Sentinel Hill) Reservoirs which will be abandoned
after this connection is completed. The cost of constructing
this connection is the responsibility of the AUTHORITY.
2. Condition Precedent to Authority's Obligation - The
AUTHORITY shall have no obligation to commence construction of
the connecting pipeline or take any other action with respect to
the Project unless and until the City of Derby shall have
approved, in form satisfactory to the AUTHORITY, the connection
of such pipeline to the 12-inch main owned by the City of Derby
which runs along New Haven Avenue from The Ansonia Derby Water
Company distribution system at Washington Avenue in Derby.
3. Ownership of Facilities - All facilities constructed
pursuant to this Agreement will be owned solely by the AUTHORITY.
4. Quantities - The AUTHORITY agrees to deliver up to 2 million
gallons of water per day to the COMPANY water system at a
hydraulic gradient of 277 feet based on U.S.C.S. data. Commencing
on the Purchase Effective Date, the COMPANY agrees to purchase at
least 200 million gallons per year during each calendar year
included in the term (including any extensions pursuant to
Section 7 hereof) of this Agreement and to purchase at least 5
million gallons per month during each calendar month included in
such term. As used herein, the term "Purchase Effective Date"
shall mean the later to occur of (i) September 1, 1984 and (ii)
the date the pipeline described herein is placed in service.
5. Water Quality - The water supplied by the AUTHORITY under
this Agreement at all times shall, at the point of metering
(which shall be considered to be the point of delivery), satisfy
all standards imposed by any Federal or State agency having
jurisdiction over the quality of public drinking water. If the
AUTHORITY shall fail to provide to the COMPANY water which
satisfies all such standards and such failure shall continue for
30 days after receipt by the AUTHORITY of written notice thereof,
the COMPANY, in its sole discretion, by written notice to the
AUTHORITY may terminate its obligation to purchase water
hereunder. Such termination shall be effective upon receipt by
the AUTHORITY of notice thereof.
6. Term of Contract - This Agreement shall be effective as of
the date first above written, and will remain in full force and
effect until the Termination Date. As used herein, the term
"Termination Date" shall mean the earlier to occur of (i) the
effective date of the merger of the COMPANY with and into the
AUTHORITY or any wholly-owned subsidiary of the AUTHORITY, (ii)
the effective date of the purchase by the AUTHORITY of
substantially all of the assets of the COMPANY, and (iii) that
date which is seven years after the Purchase Effective Date;
provided that in the event of each extension of the term of this
Agreement pursuant to Section 7 hereof, the date described in
(iii) above shall be automatically extended by the term of such
extension. Subject to Section 2 hereof, the AUTHORITY will use
its best efforts to construct the necessary facilities and
commence delivery of water to the COMPANY on or prior to
September 1, 1984.
7. Extension - This Agreement may be extended for additional
ten-year periods after the expiration of the initial contract
period referred to in clause (iii) of Section 5 above with the
written consent of both the AUTHORITY and the COMPANY. In order
to effect such an extension, the COMPANY must give written
notification of each such election no later than two years prior
to the last day of the immediately preceding term. The AUTHORITY
shall, no later than 90 days after receipt of such notice from
the COMPANY, give the COMPANY written notice of either its
approval or its disapproval, as the case may be, of such
extension. The terms and conditions applicable to any such
period of extension shall be the same as provided herein.
8. Metering - The parties hereto agree that metering shall be
considered to be a part of the Project and the obligations of the
parties with respect to metering shall be on the same terms and
conditions as provided for herein with respect to other portions
of the Project. Notwithstanding anything herein to the contrary,
the AUTHORITY shall have ownership of such meters and the right
and obligation to maintain such meters. The meters shall be
tested at six-month intervals and if there is a meter error of
five percent or more, adjustment will be made to the COMPANY's
water service charge on the basis of one-half the time elapsed
since the last test of the meter in question, unless the exact
period of existence of said error can be conclusively
established. In the event of loss of registration of flow during
any month, the COMPANY will be deemed to have consumed during
such month an amount of water equal to the historical average
monthly consumption by the COMPANY for such month, determined by
dividing (x) the sum of the consumption by the COMPANY for such
month in each year commencing with the first such month after the
Purchase Effective Date and extending to and including such month
in the immediately preceding year, by (y) that number which
represents the total number of years elapsed since the first such
month after the Purchase Effective Date; provided that if such
loss of registration should occur prior to twelve months after
the Purchase Effective Date, the COMPANY will be deemed to have
consumed during such month an amount of water equal to that
consumed by it during the immediately preceding month.
9. Cost of Water to be Delivered - The cost to the COMPANY of
water delivered pursuant to this Agreement will be computed using
the cost allocations detailed in the study entitled "Wholesale
Rate Study" prepared by Guastella Associates, Inc., and dated
June 27, 1983, which cost to the COMPANY as of the date hereof
would be $680 per million gallons. It is agreed that this study
and the cost allocations detailed therein will be updated at the
time of each of the AUTHORITY'S rate cases subsequent to the date
of this Agreement. It is agreed that with respect to each such updating:
(i) the amount used for expenditures will be based on the operating and
maintenance budget used for rate making purposes, and will include any
adjustments made during the rate making process; (ii) book value
of Utility Plant will be based on the AUTHORITY's most recent
annual filing with the Connecticut Department of Public Utility
Control; and (iii) the percentages used to allocate expenditures
to general service, as used on Schedule B and Schedule C-1 of
said study, will not change during the term (including any
extension pursuant to Section 7 hereof) of this Agreement.
The AUTHORITY will invoice the COMPANY each month for the
cost of the full amount of water delivered during the previous
month. The COMPANY will pay to the AUTHORITY the amount set
forth on each invoice no later than 30 days after the date
thereof.
10. Approvals - It is understood by the parties that this
Agreement is subject to approval by all agencies and regulatory
bodies of the State of Connecticut which have jurisdiction with
respect hereto, including without limitation the Department of
Public Utility Control, the Department of Health Services and the
Department of Environmental Protection, and is also subject to
the approval of the Representative Policy Board of the AUTHORITY.
The AUTHORITY and the COMPANY agree to cooperate and use their
best efforts in securing all necessary approvals.
11. Force Majeure - The AUTHORITY shall have no liability of
any type whatsoever to the COMPANY or any other party for any
failure, or as a result of any failure, to perform any obligation
under this Agreement, which failure is occasioned by or in
consequence of any act of God, act of public enemy, war,
blockage, insurrection, riot, epidemic, land slide, lightning,
earthquake, fire, storm, flood, washout, civil disturbance, power
failure, explosion, breakage or accident to machinery or lines of
pipe, failure or want of water supply, binding order, decree,
regulation or judgment of any court or governmental authority, or
any other cause, whether of the kind herein enumerated or
otherwise, not within the control of the AUTHORITY which act,
omission, or circumstance the AUTHORITY is unable to prevent or
overcome by the exercise of due diligence.
12. Indemnification - Subject to Section 11 hereof, the
AUTHORITY and the COMPANY each hereby agree to indemnify and hold
harmless the other against all costs, fees, expenses, damages and
losses of any type or nature which may be incurred as a result of
the breach of any of the terms of this Agreement by the other
party.
13. Non-Assignability - This Agreement shall inure to the
benefit of the parties hereto and their successors; neither this
Agreement nor the rights or obligations of the parties hereunder
may be assigned to any other party, either in whole or in part,
by either party hereto without the written consent of the other
party hereto. For the purposes of this Section 13, the term
successor shall be deemed to include any entity which purchases
substantially all of the assets of either the AUTHORITY or the
COMPANY, as well as any successor through merger to either the
AUTHORITY or the COMPANY.
14. Default - Upon the occurrence of any event of default
hereunder, all sums due to the AUTHORITY to date shall
immediately become due and payable. In addition to any other
remedy provided for hereunder, upon the occurrence of any event
of default hereunder, the AUTHORITY shall have the right, at its
sole option, to terminate the supply of water service to the
COMPANY and to exercise all rights and remedies available to it
either at law or in equity. Each of the following shall be
deemed to be an event of default hereunder:
a. The COMPANY fails to promptly observe, perform or
comply with any obligation, condition, or covenant to
be observed, performed, or complied with by the COMPANY
hereunder.
b. The COMPANY fails to pay to the AUTHORITY any amount
due hereunder on or prior to the 30th day after the
date of the invoice with respect to such amount.
c. The COMPANY makes an assignment for the benefit of
creditors or is generally unable to pay its debts as
they become due; or a decree or order appointing a
receiver, custodian or trustee for it or for
substantially all of its properties is entered and, if
entered without its consent, remains in effect for more
than 30 days; or the COMPANY commences a voluntary case
under any law relating to bankruptcy, insolvency,
reorganization or other relief of debtors or any such
case of an involuntary nature is filed against it and
is consented to by it or, if not consented to, is not
dismissed within 30 days.
15. Further Assurances - The COMPANY and the AUTHORITY each
agrees to perform all other acts and execute and deliver all
other documents reasonably requested by the other to facilitate
and complete construction of the project and to carry out the
intent and purposes of this Agreement, including without
limitation the execution and delivery by the COMPANY of such
documents, instruments and agreements as are necessary to grant
to the AUTHORITY such easements and rights of access as are
reasonably necessary for the construction and maintenance of the
Project.
16. Trade Secrets - The COMPANY and the AUTHORITY each agree
that in the event it shall obtain any trade secrets or other
information of a confidential nature relating to the other, such
information will be held in confidence and not be disclosed to
any other person or party.
17. Notice - Any notice or demand given pursuant to this
Agreement shall be deemed to have been given in accordance with
the terms hereof when delivered in person to the persons
designated below or their successors or permitted assigns, or
when sent by registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to the COMPANY:
The Ansonia Derby Water Company
230 Beaver Street
Ansonia, Connecticut 06401
Attn: John B. Dearborn, President
If to the AUTHORITY:
South Central Connecticut
Regional Water Authority
90 Sargent Drive
New Haven, Connecticut 06511-05966
Attn: George E. Block, Jr.
Director of Engineering
Either party may change its address or addresses by notice to the
other party.
18. Governing Law. This Agreement is being delivered in, and
shall be construed and interpreted according to the laws of, the
State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands and seals this 18th day of January, 1984.
SOUTH CENTRAL CONNECTICUT
REGIONAL WATER AUTHORITY
By:
Its Chairman
THE ANSONIA DERBY WATER COMPANY
By:
Its President
PURCHASE AND SALE AGREEMENT
AGREEMENT, made as of the 18th day of March 1997, by and
between BIRMINGHAM UTILITIES, INC., a Connecticut corporation,
having its principal place of business in Ansonia, Connecticut
(hereinafter referred to as the "Seller"); and M/1 HOMES, LLC, a
limited liability company organized under the laws of Connecticut
and having an office at 262 Putting Green Road, Fairfield,
Connecticut (hereinafter referred to as the "Buyer");
WITNESSETH:
In consideration of the Purchase Price described in Paragraph
1 hereof, and subject to the further terms and conditions set forth
herein, the Seller hereby agrees to sell and convey, and the Buyer
hereby agrees to purchase, the approximately 245 acres of
unimproved real property on Holbrook Road and Cemetery Road in the
Town of Seymour, Connecticut shown and described on a certain map
consisting of sheets 1 of 4, 2 of 4, 3 of 4 and 4 of 4 entitled,
"Birmingham Utilities, Parcel "A", Seymour, Connecticut, Scale 1"
= 100', by Michael H. Horbal, Registered Land Surveyors-Planners
dated June 10, 1996," a copy of which is attached hereto in four
separate sheets as Schedule A and made a part hereof (hereinafter
referred to as the "Premises"). Title to the Premises will be
conveyed free and clear of all encumbrances, liens, or exceptions
to title other than those set forth in Schedule B or in Paragraph
7 hereof.
1. CONSIDERATION
The Purchase Price, subject to the
provisions of Paragraph 13(a) hereof,
is: . . . . . . . . . . . . . . . . . . . . . .$3,950,000.00
which the Buyer agrees to pay, as follows:
(a) As Earnest Money, paid with the
execution hereof, receipt of which,
subject to collection, is hereby
acknowledged: . . . . . . . . . . . . . . . . . $ 50,000.00
(b) No later than 30 days prior to the
first day of public hearings scheduled by
the Connecticut Department of Public
Utility Control ("DPUC") as set forth in
the first schedule of proceedings to be
issued in the docket opened by the DPUC
to consider the Company's application
contemplated in Paragraph 12(b) hereof, a
Supplementary Deposit, in immediately
available funds:. . . . . . . . . . . . . . . .$ 147,500.00
(c) In immediately available funds
delivered to the Seller on the date of
the Closing of the title and upon
delivery of the deed as hereinafter
provided below. . . . . . . . . . . . . . . . .$3,752,500.00
Total Purchase Price . . . . . .$3,950,000.00
The Earnest Money deposit paid herewith in accordance with
Paragraph 1(a) above and the Supplementary Deposit paid in
accordance with Paragraph 1(b) above shall be held, subject to the
provisions of Paragraphs 12 and 13 hereof, by the Seller's attorney
in an interest bearing account.
2. DEED
The deed of conveyance to the Premises shall be in the form of
a full covenant and Warranty Deed in the usual Connecticut form,
which shall be duly executed, acknowledged and delivered, all at
the Seller's expense, conveying the fee simple title in and to the
Premises to the Buyer, free and clear of all encumbrances, liens
and exceptions to title other than those set forth in Schedule B
hereof or in Paragraph 7 hereof.
3. APPORTIONMENTS
The taxes and assessments of the Town of Seymour will be
apportioned, in accord with local custom, as of the date of the
closing of title. Should any tax, assessment, or rate be
undetermined on the date of the closing of title, the last
determined tax, assessment, or rate shall be used for the purpose
of the apportionment.
4. CONDITION OF PREMISES
The Buyer further agrees with and represents to the Seller
that it has examined the Premises, that it is fully satisfied with
the physical condition thereof, and that neither the Seller nor any
representative of the Seller has made any representation or promise
upon which the Buyer has relied concerning the physical condition
of the Premises or of any property covered by this Agreement,
except as herein may be expressly set forth.
5. TITLE
(a) It is further understood and agreed that if, on the date
herein set for the closing of title, the Seller shall be unable to
convey marketable title to the Premises to the Buyer free and clear
of encumbrances, liens or exceptions to title other than those set
forth in Schedule B hereof or in Paragraph 7 hereof, then, and in
that event, the Seller shall have a further period of thirty (30)
days within which to perfect title. If, at the end of said period,
the Seller is still unable to convey title to the Premises free and
clear of all encumbrances, liens or, exceptions to title except as
aforesaid, the Buyer may elect to accept such title as the Seller
can convey, upon the payment of the aforesaid Purchase Price, or
may reject the deed conveying such title on that ground. Upon such
rejection, all sums paid on account hereof, including the Earnest
Money deposit and the Supplementary Deposit contemplated in
Paragraphs 1(a) and 1(b) hereof, respectively, together with
interest thereon, and together with any expenses actually incurred
by the Buyer for the examination of the title to the Premises shall
be repaid by the Seller to the Buyer. The Buyer agrees to obtain
a title search of the Premises within thirty (30) days of the
execution hereof. The Buyer shall notify the Seller within said
thirty (30) day period whether the title is clear according to the
Standards of Title of the Connecticut Bar Association, and conforms
to the terms hereof. In the event that said title is clear as
aforesaid as of said date, and from and after said date the title
becomes encumbered or otherwise clouded such that the Seller is
unable to convey clear title at closing as required hereunder, in
addition to the Buyer's expenses for examination of title, the
Seller shall reimburse the Buyer an amount equal to any expenses
actually incurred by the Buyer on account of legal fees, surveying
and engineering expenses, inspection expenses, and any bank charges
and fees. Upon receipt of such payments by the Buyer, this
Agreement shall terminate and become null and void and the parties
hereto shall be released and discharged of all further claims and
obligations, each to the other, hereunder. Nothing shall
constitute an encumbrance, lien or exception to title for the
purposes of this Agreement if the Standards of Title of the
Connecticut Bar Association recommends that no corrective or
curative action is necessary in circumstances substantially similar
to those presented by such encumbrances, liens, or exception to
title.
(b) The Buyer shall give written notice to the Seller's
attorney, not less than ten (10) business days prior to the Closing
Date, of any encumbrances or defects then known to the Buyer which
the Buyer claims affect title other than those set forth in this
Agreement.
6. INSURANCE
Throughout the period between the date of this Agreement and
the date of the closing of title, the Seller shall maintain
existing liability insurance on the Premises.
7. ENCUMBRANCES
In addition to the exceptions to title in Schedule B, the
Premises will be conveyed subject to:
(a) Any applicable restrictions or limitations imposed or to
be imposed by governmental authority, including the planning and
zoning rules and regulations of the Town of Seymour;
(b) Taxes of the Town of Seymour which become due and payable
after the date of delivery of the Deed, which taxes, if any, the
Buyer will assume and agree to pay as part of the consideration for
the deed;
(c) Public improvement assessments, and/or any installments
thereof, which assessments and/or installments become due and
payable after the date of the delivery of the Deed, which
assessments and/or installments, if any, the Buyer will assume and
agree to pay as part of the consideration for the deed, provided
however, that the Seller as of the date hereof has no knowledge of
any such assessment; and
(d) The following restriction, which shall run with the land
and be included in the Warranty Deed: "The Grantee covenants and
agrees that at least fifty percent (50%) of the Premises conveyed
hereunder shall be perpetually used for `open space or recreational
purposes' as said terms are defined in subsection (f) of Section
16-5Od of the Connecticut General Statutes."
8. ENTIRE AGREEMENT
It is understood and agreed that this written Agreement
(including Schedule B, a Rider dated of even date herewith and
referred to as Schedule C, and any other schedules or any riders
referred to in the body of this Agreement and attached hereto)
constitutes the entire agreement between the parties hereto, and
that no oral statements or promises, and no understandings not
embodied in this writing, shall be valid or binding.
9. CLOSING
It is agreed by the parties hereto that the Closing of Title
(hereinafter referred to as the "Closing") shall, subject to the
provisions of Paragraph 13(a) concerning the Buyer's election to
extend this Agreement and the date for the Closing under certain
conditions, take place at the offices of Tyler Cooper & Alcorn,
Hartford, Connecticut on or before the earlier of (a) December 31,
1998 or (b) 30 days after all of the Seller Contingencies set forth
in Paragraph 12 hereof and all of the Buyer Contingencies set forth
in Paragraph 13 hereof have been satisfied or waived in writing by
both parties hereto. (the "Closing Date"), at a time to be
determined, or such other place and date as may be mutually agreed
upon by the parties hereto, at which time the deed shall be
delivered upon receipt of the balance of the Purchase Price.
10. BROKER
The parties hereto recognize that there was no agent or broker
who negotiated the sale of the Premises. This Agreement is
consummated by the Seller in reliance on the representation of the
Buyer that no broker or agent brought the Premises to the Buyer's
attention or was, in any way, a procuring cause of this sale and
purchase. The Seller represents to the Buyer that no broker or
agent represented the Seller in the sale of the Premises to the
Buyer or has any exclusive sale or exclusive agency listing on the
Premises. Any damages which may accrue as a result of any breach
of a representation contained in this Paragraph 10 shall include
without limitation, all reasonable costs of defending any claim for
commissions, including reasonable attorney's fees. The Buyer
hereby agrees to indemnify and hold harmless the Seller against any
judgment against the Seller arising out of the claim of any broker
or agent for a commission due by reason of this sale, where it is
alleged that said broker or agent called the Premises to the
Buyer's attention or interested the Buyer therein, provided that
said indemnity shall also include all costs of defending any such
claim whether or not such claim results in a judgment against the
Seller and provided further that said indemnity shall also include
any settlement of such claim to the extent such settlement shall
have been approved in writing by the Buyer, including without
limitation reasonable attorney's fees. The provisions of this
paragraph shall survive the delivery of the deed hereunder.
11. DEFAULT
If the Buyer shall fail to comply with any term of this
Agreement by the time set for Closing of Title, the Seller shall
hold and retain all sums of money paid in accordance with this
Agreement or any modification or extension hereof, including
without limitation both the Earnest Money deposit and the
Supplementary Deposit contemplated in Paragraphs 1(a) and 1(b)
hereof, respectively, with all interest earned thereon, as
liquidated damages for the breach of this Agreement, whereupon all
rights and remedies hereunder shall cease and be at an end. In
this case, the Buyer shall immediately return its copy of this
Agreement to the Seller for cancellation. If this Agreement shall
have been recorded on the Land Records by either party hereto, the
Buyer shall, at its expense, deliver to the Seller a Quit Claim
Deed releasing any and all interest hereunder. If the Buyer shall
fail to deliver such a deed to the Seller within thirty (30) days
after the date set for the Closing of Title, the Seller shall have
the right to commence an action to procure an adjudication of the
termination of the Buyer's rights hereunder in which case the Buyer
shall pay the expense of searching the title for the purpose of
such action, together with all costs including, without limitation,
the reasonable fees of the Seller's attorneys.
If the Seller shall fail to comply with any term of this
Agreement by the time set for the Closing of Title, the Buyer may
enforce this Agreement according to law and equity, except that
failure to comply by the Seller as a result of (i) encumbrances or
defects in title shall be governed by the provisions of Paragraphs
5 and 7 of this Agreement and (ii) any violation of any
representations set forth in Paragraph 15 shall be treated as if
such violation were a defect in title and the Buyer shall have only
the remedies set forth in Paragraph 5 hereof.
Notwithstanding any other provision of this Agreement, in the
event either party hereto shall breach this Agreement, the non-
breaching party shall be entitled to recover all costs and expenses
(including, without limitation, reasonable attorney's fees)
incurred in enforcing this Agreement or resulting from the said
breach.
12. SELLER CONTINGENCIES
(a) Purchase Rights. The Premises are subject to statutory
purchase rights in favor of the Town of Seymour, the State of
Connecticut, Bridgeport Hydraulic Company, The Connecticut Water
Company, Heritage Village Water Company, South Central Connecticut
Regional Water Authority, and certain non-profit organizations, all
as set forth in the applicable provisions of the Connecticut
General Statutes (Sections 16-50c, 16-5Od, and 25-331). If any of
said rights are exercised or shall not have expired or been waived
in accordance with their statutory terms by December 31, 1997,
Seller shall return to Buyer any sums paid hereunder, including
both the Earnest Money deposit and the Supplementary Deposit
contemplated in Paragraphs 1(a) and 1(b) hereof, respectively,
together with interest thereon, within seven (7) days after such
exercise and, upon such return of said sums, this Agreement and the
obligations of the parties hereunder shall terminate and come to an
end.
(b) DPUC Approval. Notwithstanding any provision of this
Agreement to the contrary, the Seller's obligation to sell the
Premises hereunder is contingent upon the Seller obtaining Final
approval from the DPUC (which approval shall become "Final" only
upon the expiration of the applicable appeal periods without any
appeal having been filed or served), for the sale of the Premises
to the Buyer pursuant to Section 16-43 of the Connecticut General
Statutes, and upon final approval by the DPUC, as defined above, of
a ratemaking accounting treatment for the net gain from such sale
reasonably satisfactory to the Seller. Such satisfaction shall be
deemed to have been obtained if the Seller does not notify the
Buyer to the contrary in writing within five (5) business days from
the DPUC's Final approval of the sale and ratemaking accounting
treatment. Seller agrees to submit this Agreement to the DPUC for
approval within 35 days after publishing notice of its intention to
sell in accordance with Section 16-50c(b)(2) of the Connecticut
General Statutes, to diligently pursue such application and to
supply to the Buyer copies of all appraisals of the fair market
value of the Premises obtained by the Seller to be submitted to the
DPUC in connection with he Seller's application for approval. If
the Seller shall not have received such Final approval by November
14, 1997, the Seller shall return to Buyer all sums paid hereunder,
including the Earnest Money deposit and the Supplementary Deposit
contemplated in Paragraphs 1(a) and 1(b) hereof, respectively,
together with interest thereon, within seven (7) days after said
date and, upon such return of said sums, this Agreement shall
terminate and the obligations of the parties hereunder shall
terminate and come to an end.
13. BUYER CONTINGENCIES
(a) Notwithstanding any provision of this Agreement to the
contrary, the Buyer's obligation to purchase the Premises hereunder
is conditioned upon the Buyer obtaining Final approval (which term
shall have the meaning set forth in Paragraph 12(b) hereof)
reasonably satisfactory to the Buyer of federal, state and local
land use regulatory authorities, including without limitation an
appropriate change in the Town of Seymour zoning regulations
applicable to the Premises, the Traffic Commission of the State of
Connecticut, the United States Army Corps of Engineers, and the
Town of Seymour Planning and Zoning and Inlands Wetlands
Commissions necessary for the development on the Premises of an 18
hole golf course together with not less than 180 active adult
residential building lots with detached single family dwellings and
a club house and catering facility on or before December 31, 1998.
The Buyer agrees to submit and diligently pursue timely and
complete applications to the Traffic Commission of the State of
Connecticut for approval of the Buyer's above proposed use of the
Premises as soon as practicable after the execution of this
Agreement. The Buyer agrees to submit and diligently pursue timely
applications for all other such approvals as soon as practicable
after the earlier of (a) the date Seller provides to the Buyer
copies of the appraisals contemplated in Paragraph 12(b) hereof,
but only if the average fair market value for the Premises
disclosed in those appraisals is less than or equal to than the
Purchase Price for the Premises herein, or (b) if the said average
fair market value disclosed in said appraisals is not less than or
equal to the said Purchase Price, as soon as practicable after the
Final approval of the sale of the Premises by the DPUC as
contemplated in Paragraph 12(b) hereof. Seller agrees to provide
reasonable cooperation to the Buyer in connection with the Buyer's
applications. If the Buyer shall not have received all such Final
approvals by December 31, 1998, the Buyer may, upon written notice
submitted to the Seller not later than December 31, 1998, terminate
this Agreement and, subject to the remaining provisions of this
Paragraph 13(a), the obligations of the parties hereunder shall
terminate and come to an end. In the event that the Seller
Contingencies described in Paragraph 12 hereof have been satisfied,
or the date for their satisfaction has not yet occurred, and this
Agreement is terminated in accordance with the provisions of this
Paragraph 13, the Seller shall return to the Buyer the
Supplementary Deposit paid in accordance with Paragraph 1(b)
hereof, together with interest thereon and the Seller may retain
the Earnest Money deposit paid in accordance with Paragraph 1(a)
hereof, together with the interest thereon. If this Agreement is
terminated or the purchase and sale of the Premises contemplated
herein does not take place for any reason other than the failure of
the Seller to comply with the provisions of this Agreement, the
Buyer shall, upon the request of the Seller, provide to the Seller
as soon as practicable after such request copies of all documents,
plans, drawings, letters, notebooks, reports, or other papers or
electronic media detailing the Buyer's proposed development of the
Premises and all applications for the approvals contemplated in
this Paragraph 13.
Notwithstanding the provisions set forth in this Paragraph
13(a) above, if (i) the Buyer shall have obtained all of the
approvals contemplated in this Paragraph 13(a) on or before
December 31, 1998, but one or more of the said approvals has not
become Final solely because a third party has initiated an appeal
of such approval to a court of competent jurisdiction, in lieu of
terminating this Agreement as contemplated above, the Buyer may, by
written notice submitted to the Seller not later than December 31,
1998, elect to extend this Agreement and the date for the Closing
to the earlier of (A) December 31, 2000, or (B) the date which
thirty (30) days after all such appeals have been determined
finally in a manner reasonably satisfactory to the Buyer, and (ii)
if, prior to December 31, 1998, one or more of the Buyer's
applications for approval contemplated in this Paragraph 13 is
denied, the Buyer may, by written notice submitted to the Seller
not later than December 31, 1998, elect to appeal, at Buyer's
expense, any such denial and to extend this Agreement and the date
for the Closing to the earlier of (X) December 31, 2000, or (Y) the
date which is thirty (30) days after all such appeals have been
determined finally in a manner reasonably satisfactory to the
Buyer, provided however, that if the Closing shall occur after
December 31, 1999 by reason of the Buyer's election pursuant to
this Paragraph 13(a), the Purchase Price to be paid by the Buyer
for the Premises shall be increased by twenty thousand dollars
($20,000) for each month, or portion thereof, which passes from
December 31, 1999 until the Closing, which amounts shall be payable
monthly, in advance, and shall be deemed to be additional Earnest
Money deposit for all purposes under this Agreement.
(b) Seller agrees that it shall, at its sole expense,
construct a sanitary sewer line with capacity reasonably
satisfactory to the Buyer's engineer to serve the Buyer's proposed
development on the Premises of a golf course, not less than 180
detached single family residential units and a club house and
catering facility, which sanitary sewer line shall connect to the
sanitary sewer system of the Seymour Water Pollution Control
Authority through an easement over the Seller's property adjacent
to the Premises located on Cemetery and Holbrook Roads. The
sanitary sewer to be constructed by the Seller shall end at the
boundary of the Premises on Cemetery Road. It shall be a condition
of the Closing herein that (i) the Seller shall have obtained, at
its expense, final design plans and local approvals necessary for
the construction of the sanitary sewer extension not later than
ninety (90) days after the satisfaction of the Seller Contingencies
contemplated in Paragraph 12 hereof, and (ii) Seller shall have
begun construction of the sanitary sewer line on or before the date
of the Closing. The Seller agrees to pursue diligently all
governmental approvals necessary for the construction of the sewer
line and shall provide reasonable surety for the completion of the
sewer line, provided that the Buyer agrees that if the Town of
Seymour shall require a bond for the completion of the sewer line,
such surety shall be deemed to satisfy the surety required herein.
14. EFFECT AND ASSIGNMENT
The covenants and agreements herein are to be binding upon and
inure to the benefit of the parties hereto, their respective heirs,
representatives, successors and assigns and shall survive the
delivery of the deed hereunder. No assignment of this Agreement by
the Buyer shall be valid unless the Seller assents thereto in
writing, provided however, that the Buyer may, subject to any
approval as may be required by law, including without limitation,
the provisions of Section 16-1-61 of the Regulations of Connecticut
State Agencies, assign its rights under this Agreement to an entity
which is an Affiliate of the Buyer. For the purposes hereof, an
Affiliate is a person or entity that directly controls, or is
controlled by, or is under common control with the Buyer and which
has, in the reasonable opinion of the Seller, the financial
capacity to comply with the Buyer's obligation hereunder equal to
or greater than the financial capacity of the Buyer. This
Agreement constitutes the entire agreement between the parties and
may not be changed except by a contract in writing signed by the
party or parties against which enforcement of any waiver, change,
modification, extension, estoppel, or discharge is sought.
Whenever used, the singular number shall include the plural, the
plural the singular, and the use of any gender shall be applicable
to all genders.
15. NO VIOLATIONS
The Seller represents that at the time of the closing of
title, there shall exist with respect to the Premises no violations
of government (including environmental and zoning and planning)
rules, regulations or limitations, unless same have become legally
non-conforming, and no violations of any restrictive covenant,
agreement or condition subject to which the title is to be conveyed
in accord with the terms hereof, provided however, the sole remedy
for any violation of the representations contained in this
Paragraph 15 shall be treated as if such violation were a defect in
title, and the Buyer shall have only the remedies set forth in
Paragraph 5 hereof.
16. OWNERSHIP
Seller represents that at the signing of this Contract, the
Seller is the record owner in fee simple of the Premises being
conveyed herein and is not under any incapacity, other than the
statutory provisions set forth in Section 12 hereof, which prevents
it from entering into this Agreement or complying with the terms
thereof.
17. NOTICES
Any notice provided for by this Agreement and any other notice
or communication which either party may wish to send to the other
(collectively "Notices") shall be in writing and given by personal
delivery or sent by (a) United States registered or certified mail,
return receipt requested, (b) or a nationally recognized commercial
courier such as Federal Express Corporation for overnight delivery,
in a properly sealed envelope, postage or fees, as the case may be,
prepaid, addressed to the party for which such notice is intended,
at such party's address set forth below or at any other address
provided in writing by such party to the other by notice complying
with this Paragraph 17:
If to Buyer, to:
M/1 HOMES, LLC
262 Putting Green Road
Fairfield, Connecticut 06432
With a copy to:
Stephen E. Tower, Esquire
Willinger, Shepro, Tower & Bucci
855 Main Street
Bridgeport, Connecticut 06604
If to the Seller, to:
Birmingham Utilities, Inc.
236 Beaver Street
P.O. Box 426
Ansonia, Connecticut 06401
Attention: Betsy Henley-Cohn, Chairwoman
With a copy to:
Robert J. Metzler, Esq.
Tyler Cooper and Alcorn
185 Asylum Street, CityPlace I
Hartford, Connecticut 06103
18. BUYER'S FINANCIAL CONDITION DOCUMENTATION
At or prior to the time of the payment of the Supplementary
Deposit contemplated in Paragraph 1(b) hereof, the Buyer (or its
assignee, if applicable) shall submit documentation (the
"Documentation") which shall demonstrate and substantiate to the
Seller's reasonable satisfaction that the Buyer has the financial
ability to purchase the Premises in accordance with the terms of
this Agreement. In the event that the Documentation fails to
reasonably satisfy the Seller concerning Buyer's (or its
assignee's, if applicable) financial capacity, the Seller may
terminate this Agreement, return to the Buyer the Supplementary
Deposit (if paid) contemplated in Paragraph 1(b) and retain the
Earnest Money deposit contemplated in Paragraph 1(a) as
liquidated damages. Notwithstanding the above termination
rights, prior to such termination, the Seller shall give notice
to Buyer of the specific inadequacies of the information set
forth in the Documentation, and give Buyer a reasonable period,
in no event less than ten (10) days, to correct or supplement the
Documentation. The parties agree that the Buyer may, by way of
illustration but not limitation, obtain financing in part from
one or more lenders, and may obtain cash infusions from one or
more investors (whether by equity participation or loan).
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands and seals as of the day and in the year hereinbefore
indicated.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
As to Seller:
BIRMINGHAM UTILITIES, INC.
ID# 06-0878647
__________________________ By____________________________
Betsy Henley-Cohn
Its Chairwoman
__________________________ Duly Authorized
As to Buyer:
M/1 HOMES, LLC
__________________________ By____________________________
Glenn Tantangelo
Its Member
__________________________ Duly Authorized
STATE OF CONNECTICUT)
) ss: New Haven March 18, 1997
COUNTY OF NEW HAVEN )
Personally appeared Betsy Henley-Cohn, Chairwoman of
BIRMINGHAM UTILITIES, INC., signer and sealer of the foregoing
instrument, and acknowledged the same to be her free act and deed
and the free act and deed of said BIRMINGHAM UTILITIES, INC.,
before me.
__________________________________
Commissioner of the Superior Court
STATE OF CONNECTICUT)
) ss: New Haven March 18, 1997
COUNTY OF NEW HAVEN )
Personally appeared Glenn Tantangelo, Member of the M/1
HOMES, LLC, signer and sealer of the foregoing instrument, and
acknowledged the same to be his free act and deed and the free
act and deed of said M/1 HOMES, LLC, before me.
__________________________________
Commissioner of the Superior Court
SCHEDULE A
[MAP NOT INCLUDED]
SCHEDULE B
None.
SCHEDULE C
RIDER TO PURCHASE AND SALE AGREEMENT ("Agreement")
BIRMINGHAM UTILITIES, INC.
(SELLER)
AND
M/1 HOMES, LLC
(BUYER)
DATED: March 18,1997
1. Seller represents and warrants, in order to induce Buyer to enter
into the Agreement (as amended by this Rider), unless otherwise stated, at the
time of closing of title that:
(i) No utilities cross the property of any adjoining owner in
servicing the premises being conveyed herein, except as specifically set
forth herein; and no utilities cross the premises being conveyed herein and
serve the property of any adjoining owner except as specifically set forth
herein.
(ii) There are no municipal assessments, and or installments,
community or association dues and the premises does not lie within any special
tax district in which taxes or assessments are levied separate and distinct
from municipal taxes.
2. As part consideration for the sale and purchase of the subject
premises, the Seller hereby agrees to:
(i) Remove from the premises, all items of personal property other
than those specifically included in the sale.
(ii) Execute at the time of closing of title hereunder, an affidavit
verifying the nonexistence of mechanics and materialmen liens and lien
rights, tenants rights and security interests in personal property and
fixtures being sold with the premises.
(iii)Deliver exclusive possession of the premises being conveyed
hereunder to the Buyer.
(iv) Deliver, if the Seller is a corporation, to the Buyer a
corporate resolution and other appropriate proof certifying that said
corporation is a duly formed and validly existing corporation, authorized to
do business in the State of Connecticut, and has good and full right and
authority to execute the terms of the Agreement (as amended by this Rider)
and to convey the premises to the Buyer as stated hereunder.
3. In the event it is expressly provided in the Agreement (as amended by
this Rider) that the premises are to be conveyed subject to any provisions
of any easements, rights of way, covenants, restrictions or agreements, the
Buyer shall have no obligation to purchase the subject premises in the event
any of the same render title to the premises unmarketable or in the event any
of the same restrict the use of the premises as contemplated herein.
4. This Agreement is expressly contingent upon the Buyer's ability to
procure a title insurance policy in form and substance reasonably satisfactory
to the Buyer and Buyers mortgage institution, issued by a title insurance
company approved by the Buyer in the amount of the purchase price (fee
policy), insuring the Buyer without exceptions other than those exceptions
to title set forth in this Agreement and other than those exceptions
approved by the Buyer. Said policy shall be issued at standard rates and all
fees incurred for the issuance of the same shall be the sole expense of the
Buyer. The Seller agrees to execute all affidavits and documents required by
the title insurance company to enable the company to insure over any survey,
rights of others in possession of the premises, mechanic's liens rights and
any other exceptions not approved by the Buyer, or permitted by the Agreement.
Seller shall have the same opportunity to cure, as set forth in paragraph 5 of
the Agreement.
5. The Seller hereby grants the Buyer and Buyer's agents, representatives
and employees the right to enter the subject premises at any and all times
after the execution and delivery of the Agreement (after prior Notice to
Seller, and in sole discretion of Seller in the presence of the Seller and/or
its agent) in order to make physical inspections of the premises, including
subsurface tests, utility surveys, sewage disposal surveys, perimeter
surveys, inspections and appraisals and to conduct and carry out any and all
other engineering studies and operations Buyer may desire, all at Buyers sole
cost and expense. The Buyer agrees to indemnify the Seller for any claim made
against Seller as a result of Buyers entry (including acts of Buyer's agents,
contractors and/or employees) and further agrees to restore the premises to
substantially the condition the same were in prior to the taking of said
tests and surveys.
6. Notwithstanding any provisions contained in the Agreement which may
allow the Seller to postpone the closing of title beyond 30 days after the
scheduled closing, in the extent the Seller shall postpone the closing of
title for any reason whatsoever, which postponement would cause the closing
date to occur subsequent to the expiration date of the mortgage commitment
obtained by the Buyer, and in the event such lending institution increases
the rate of interest, or the mortgage origination fees or other comparable
charges, or the monies once committed become unavailable, the Buyer shall
have the right to terminate this Agreement and receive a return of all
deposit monies paid hereunder without interest.
7. The Seller agrees not to further voluntarily encumber the premises and
to notify the Buyer immediately of any matters including, but not limited to,
attachments, liens and zoning matters which may affect the premises during
the pendency of this Agreement.
8. Intentionally deleted.
9. The Seller represents that Seller is not a foreign person as defined
in The Foreign Investment in Real Property Tax Act ("FIRPTA"), as amended by
The Tax Reform Act/Deficit Reduction Act of 1984 ("DEFRA"). Seller agrees to
execute, at or before the time of closing, an affidavit disclosing Seller's
United States taxpayer identification number and certifying that Seller is
not a foreign person. Said affidavit shall be in form and content acceptable
to Buyer. The Seller shall indemnify and hold the Buyer harmless from any loss,
damage or expense, including reasonable attorney fees, Buyer may incur due to
misrepresentation of the statements contained in this paragraph. In the
event Seller fails to execute and deliver to Buyer the aforementioned
affidavit, the Buyer shall withhold from the Seller ten (10%) percent of the
gross amount realized on the disposition and remit said sum to the Internal
Revenue Service to be applied toward the Seller's tax liability in
accordance with the requirements of said Acts. The foregoing representations
shall survive the closing of title and delivery of deed hereunder.
10. The Seller represents that Seller has not caused any "spill" as
such term is defined in Public Act No. 87-475 of the State of Connecticut,
entitled "An Act Concerning The State's Lien For Reimbursement For Expenses
Incurred In Containing, Removing or Mitigating Hazardous Waste" or any
amendments, substitutions or successor statute thereof. Seller further
represents that Seller has no knowledge of any discharge, spillage,
uncontrolled loss, seepage or filtration of oil or petroleum or chemical
liquids or solid, liquid or gaseous products or hazardous waste impacting
the subject premises. The Seller shall indemnify and hold the Buyer and
Buyer's mortgagee harmless from any loss, damage or expense, including
reasonable attorney fees, Buyer and Buyer's mortgagee may incur due
to misrepresentation of the statements contained in this paragraph. The
foregoing representations shall survive the closing of title and delivery of
deed hereunder for three (3) years.
The Seller agrees to execute an affidavit in form substantially as
appended hereto marked Exhibit A-A.
11. In the event of a conflict between the terms of this Rider and the
Agreement of which it is a part, the terms of this Rider shall control.
SELLER:
BIRMINGHAM UTILITIES, INC.
By:
Its
Duly authorized
BUYER:
M/1 HOMES, LLC
By:
Its
Duly authorized
EXHIBITA-A
AFFIDAVIT
STATE OF CONNECTICUT )
) SS
COUNTY OF )
being duly sworn, deposes and says:
1. I am familiar with the premises certain 245 acres of unimproved land in
Seymour, Connecticut, being more particularly described on Schedule A
attached hereto and made a part hereof.
2. From , 19 , until the date of this affidavit, I have
been the of the owner of the Premises.
3. No part of the Premises is in violation of any statute, law, rule or
regulation of, or under any remediation or monitoring order of, the
Environmental Protection Agency ("EPA"), Connecticut Department of
Environmental Protection ("DEP"), or any other municipal, state, or
federal agency or authority having jurisdiction thereof, in connection
with air compliance, noise compliance, hazardous materials, waste
management, water compliance and/or any other environmental concern.
4. There has been no determination by the EPA or any court of law that the
Owner of the premises has caused any discharge, spillage, loss, seepage
or filtration of hazardous waste, oil, petroleum, chemical liquids, or
solid, liquid, or gaseous products, within the meeting of any federal
statute, rule or regulation, on the premises or on any other property
owned or leased by the Owner.
5. There has been no determination by the Commissioner of Environmental
Protection or any court of law that the Owner of the Premises has caused
any discharge, spillage, loss, seepage or filtration of hazardous waste,
oil, petroleum, chemical liquids or solid, liquid or gaseous products,
within the meaning of Connecticut General Statutes Section 22a-1 34, et
seq., as amended, on the Premises, or any other property owned or leased
by the Owner in the State of Connecticut.
6. No monies have been expended nor has any contract been entered into with
any party, including but not limited to the Commissioner of Environmental
Protection, for which a lien could arise under Connecticut General
Statutes Section 22a-1 34, et seq., as amended, with respect to the
Premises.
7. During the period of the Owner's ownership of the Premises, the Premises
have been occupied by the following occupants: None.
8. During the period of the Owner's ownership of the Premises, the Premises
have been used only for the following uses, businesses, activities: Public
drinking water supply water shed.
9. The current use of the Premises is as follows: Public drinking water supply
water shed.
10. Prior to the Owner taking title to the Premises, the premises had been to
the best of the knowledge of the undersigned used for the following
purpose(s): farm land or forest land.
11. To the best of my knowledge and belief, there has been no discharge,
spillage, loss, seepage or filtration of oil, petroleum, chemical liquids
or hazardous waste on or abutting the Premises except as follows: None.
12. To the best of my knowledge and belief, there exists no environmental site
assessments concerning the Premises.
13. To the best of my knowledge and belief, the Premises comply with all
applicable regulations of any federal, state or governmental agency,
including the Connecticut Department of Environmental Protection.
14. The following permits have been issued by federal, state and/or local
governmental agencies concerning the Premises or any operations conducted
thereon, copies of which permits are attached: None.
15. To the best of my knowledge and belief, the Premises have never been
investigated by any federal, state or local agency for possible illegal
storage or dumping of oil, petroleum, chemical liquid or hazardous waste
except as follows: None.
16. There are no underground storage tanks on the Premises, and no oil,
petroleum, chemical liquids or hazardous waste is stored on the Premises.
17. The Premises is not an "establishment" as defined by Connecticut General
Statutes Section 22a-134, et seq., as amended.
18. The undersigned makes the aforementioned representations and
indemnification in order to induce M/1 Homes, LLC to purchase the Premises
with the knowledge and understanding that M/1 Homes, LLC is relying on the
truth and accuracy of the same.
Subscribed and sworn to before me this day of , 1997.
Commissioner of the Superior Court
Notary Public
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's December 31, 1996 audited balance sheet, income statement and cash
flow statement, and notes thereto, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 12,294,866
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,864,593
<TOTAL-DEFERRED-CHARGES> 870,786
<OTHER-ASSETS> 1,038,225
<TOTAL-ASSETS> 15,568,420
<COMMON> 2,221,786
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,619,188
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,840,974
0
0
<LONG-TERM-DEBT-NET> 5,981,000
<SHORT-TERM-NOTES> 125,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 169,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,452,446
<TOT-CAPITALIZATION-AND-LIAB> 15,568,420
<GROSS-OPERATING-REVENUE> 4,379,771
<INCOME-TAX-EXPENSE> 128,459
<OTHER-OPERATING-EXPENSES> 3,524,650
<TOTAL-OPERATING-EXPENSES> 3,653,109
<OPERATING-INCOME-LOSS> 726,662
<OTHER-INCOME-NET> 627,857
<INCOME-BEFORE-INTEREST-EXPEN> 1,354,519
<TOTAL-INTEREST-EXPENSE> 589,782
<NET-INCOME> 764,737
0
<EARNINGS-AVAILABLE-FOR-COMM> 764,737
<COMMON-STOCK-DIVIDENDS> 381,031
<TOTAL-INTEREST-ON-BONDS> 464,187
<CASH-FLOW-OPERATIONS> 348,773
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
